Small-ticket SIPs shrink as market volatility tests new investors

Folios with up to ₹1,000 monthly inflows fell 1.4 mn in FY26; larger accounts grew

The number of small-ticket systematic investment plan (SIP) accounts, which helped drive the mutual fund (MF) industry’s post-Covid pandemic retail expansion, declined last financial year as market volatility hit a segment with a large base of first-time investors, many of whom invested without distributor or adviser handholding. SIP accounts with monthly contributions of ₹1,000 or less fell by 1.4 million in 2025-26, even as higher-ticket accounts continued to grow. 

The reversal follows at least two years of strong growth. The lower-value SIP segment expanded by 37 per cent and 16 per cent in the previous two years, according to data from the Securities and Exchange Board of India (Sebi). 

“A large segment of investors who entered the market in 2023 and 2024 came in looking at past returns. Many of them invested through direct apps, without anyone handholding them when markets turned volatile. The level of investor awareness is lower among the lower-income segments, and that is where we are seeing the impact more clearly,” said the chief executive officer (CEO) of a large fund house. 

The churn is generally high in this segment, said Pushpendra Singh, co-founder of Centricity. “Investors in this bracket tend to be more impulsive — you see the most additions when markets are rallying and the highest closure rates when there is a correction. A large part of this segment invests directly and therefore lacks handholding. Distributors also tend to pay less attention to these investors because the small ticket sizes do not generate enough revenue for them,” he said. 

The equity market was on a bull run in 2023 and 2024, when the bulk of new investors entered, but has been volatile over the past two years. The Nifty 50 index remains below its September 2024 peak, while smallcap and midcap indices have only recently surged to new highs. 

SIP accounts with higher ticket sizes, meanwhile, continued to grow across all slabs, albeit at a slower pace and from a much smaller base. 

Accounts in the ₹1,001-3,000 bracket rose 0.5 per cent to 33.5 million in FY26, while those in the ₹3,001-5,000 bracket grew 2.8 per cent to 14.4 million. The ₹5,001-10,000 segment expanded 5 per cent to 6.2 million, while accounts with monthly contributions of more than ₹10,000 grew 5.9 per cent to 3 million. 

Madan Sabnavis, chief economist at Bank of Baroda, said the divergent trend across brackets could be the result of a mix of factors. “It would be difficult to point to one particular reason. The volatility in equity markets would obviously be a factor, as returns may not have met the expectations of some investors, particularly those who entered more recently. At the same time, there could also be some migration within the SIP base, with investors moving from lower ticket sizes to higher ones as their income and investment capacity increase,” he said. 

Dhirendra Kumar, CEO of Value Research, said the decline in smaller-ticket SIPs may not necessarily mean investors are exiting MFs, although there could be some attrition. “That is mostly graduation, not exit. There is genuine attrition too, and that is expected. A small SIP started in a rising market, without a specific goal attached to it, is the easiest one to stop when returns flatten,” he said. 

Distributors also pointed to a gradual migration towards higher-ticket SIPs. “Existing investors may be stepping up SIP contributions as incomes rise and financial awareness improves, while investors are also consolidating smaller SIPs into more meaningful allocations,” said Aditya Agarwal, co-founder of Wealthy.in. 

Manish Kothari, co-founder and chief executive of ZFunds, echoed the view, saying, “This is a natural progression, investors starting small graduating to larger SIPs as incomes and investment conviction grows.”