Growth momentum in direct mutual funds sustains even as markets wobble

Individual investors' AUM in direct plan soars 43% in 2025, far outpacing 11% growth in regular plan

The post-pandemic surge in ‘direct’ investing in mutual funds continued through 2025, even as equity markets posed challenges for investors.

 

Assets under management (AUM) in direct plans jumped 43.5 per cent in 2025 (as of November), sharply outpacing the 11 per cent growth recorded by regular plans of individual investors.

 

Direct plans — the lower-cost option for ‘do-it-yourself’ (DIY) investors — have been consistently outpacing growth in recent years. It was driven by rising investor awareness following the post-Covid market rally, the ease of investing through fintech platforms, and a relatively smaller base.

 

According to MF officials, while on the surface, direct plan has managed to sustain the growth momentum despite equity market volatility last year. But the trend will be clearer in the scheme-wise break-up of flows. 

“Direct plan investing is not limited to equity schemes. Investors are increasingly exploring hybrid schemes, commodity funds and even debt schemes, especially on DIY platforms, through this route,” said D P Singh, deputy managing director (MD) & joint chief executive officer (CEO), SBI Mutual Fund.

 

The direct and regular plan break-up of total assets is only available at the industry level.

 

MF schemes come in two variants — regular and direct — with cost being the only differentiator. Regular plans are on the expensive side as they have a commission component in the expenses they charge investors.

 

Regular plans are mostly sold by individual distributors and banks, while direct plans are primarily sold by online investment platforms like Groww and Zerodha.

 

While the direct plan has sustained its growth trajectory, regular plan AUM of individual investors has seen a sharp fall in growth last year.

 

The regular plan AUM (as of November) was up only 11 per cent in 2025 compared to 31 per cent growth in 2024.

 

The direct plan growth in 2025 — at 43.5 per cent — is closer to the 46 per cent jump seen in 2024.

 

The sharper rise in direct plan AUM has led to a surge in their share in total AUM.

 

As of November 2025, direct plan had a 28 per cent share in individual MF AUM, up from 21 per cent at the start of 2024. Direct plans were introduced in 2013.

 

The growth has been more pronounced in the post-Covid period as rapid growth of fintech platforms and MF apps made direct investing simpler.

 

At the same time, awareness around fees and returns has improved, aided by social media and a steady rise in financial literacy.