SECTIONSFinTechs Add 1.3 M New Mutual Fund SIPs in NovBy Pratik Bhakta, ET BureauRate StoryFollow usShareFont SizeAbcSmallAbcMediumAbcLargeSavePDFCommentSynopsis
Fintech startups Groww, Angelonia and PhonePe are emerging as top distributors of mutual fund products, adding lakhs of new systematic investment plans (SIPs) every month.
iStockFintech startups Groww, AngelOne and PhonePe are emerging as top distributors of mutual fund products, adding lakhs of new systematic investment plans (SIPs) every month. They drew in nearly half the new plans opened in November 2023, according to data from asset management companies shared exclusively with ET.
The Association of Mutual Funds of India (AMFI) noted that over 3 million new SIPs were created in November 2023, of which around 1.3 million were opened on fintech platforms, according to industry estimates. Groww opened more than 700,000 new SIPs while more than 200,000 were generated by AngelOne and over 120,000 by PhonePe. Paytm Money, the wealth management subsidiary of Paytm, generated around 76,000 new SIPs in November.
“We have seen significant growth in SIP transactions on our platform over past two years,” said Ujjwal Jain, CEO of Share.Market, the wealth management arm of PhonePe.
“Our total monthly SIP transactions have almost doubled between December 2022 and 2023,” Jain said. The firm began mutual fund distribution in 2019 but launched the complete range of these products only in mid-2021. It now accounts for “roughly 5% of the overall new SIP registrations in the mutual fund industry”, he added.
To be sure, this growth has come at a time when the Indian equities market is clocking unprecedented expansion. AMFI data shows that contribution towards mutual fund SIPs in November 2023 was at ₹17,073 crore, up 28% from ₹13,306 crore a year back.
ET reviewed the data shared with asset management companies by CAMS (Computer Age Management Services), a service provider to the mutual fund industry. It showed that the overall share of new accounts opened by fintech firms has grown steadily between September and November 2023.
Meanwhile, NJ Wealth and State Bank of India — the largest traditional distributors of mutual funds in the country — are also adding an average of more than a lakh new SIPs every month, the data showed. The data for December 2023 will only be released later this month.
Groww and Paytm Money did not respond to ET’s queries.
The inroads being made by new-age fintech firms in SIP distribution mirrors their domination of the country’s stock broking business alongside peers like Zerodha. However, while stock broking platforms generate revenue against every trade placed by an investor, fintech startups view mutual funds more as a hook to acquire customers for their fee-generating wealth management services, according to industry experts. These platforms earn the bulk of their revenue from customers using their broking services or accessing credit and making payments, they noted.
Pointing out that fintechs are using social media platforms like Instagram and YouTube to reach a much larger audience, a founder of a wealth-tech startup said that “a large chunk of the new users who might be starting their investment journey now are also using these apps since they offer a better user experience”.
Share.Market’s Jain said his company leverages PhonePe’s large distribution base by offering transactional ease with better technology and helping clients make investment decisions by using an experienced research team.
“More and more investors are investing in mutual funds through the direct route and these apps are providing them with a good user interface, which is helping startups grab market share,” said a senior fintech industry executive on condition of anonymity.
Mumbai-based AngelOne said it generated around 725,000 new SIPs in the second quarter of fiscal 2024. It was 430,000 in the previous quarter while it was 48,000 a year ago.
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