Systematic Investment Plans (SIPs) with small contribution amounts, which previously stimulated retail demand for Mutual Funds (MFs) after the pandemic, showed a slowdown in growth last year. In the fiscal year 2026, SIP accounts valued up to 1000 rupees decreased by 1.4 million, while accounts with higher amounts continued to grow.
This decline occurred after the low-entry segment demonstrated significant growth for at least two years. According to data from the Securities and Exchange Board of India, this segment grew by 37% and 16% in the previous two years, respectively.
Experts attribute the drop in the segment below 1000 rupees to stock market volatility and increased outflow in direct investment channels. The CEO of a large fund noted that this is an expected scenario: many investors who entered the market in 2023 and 2024 were focused on past returns. They often invested through direct applications without support when markets became unstable, and the level of investment awareness among low-income segments proved lower.
Pushpendra Singh, co-founder of Centricity, emphasized that outflows are typically high in this segment. He added that investors in this category tend to make impulsive decisions: the highest number of top-ups is observed during market growth, and the highest closure rates occur during corrections. Since most of this segment invests directly, they lack advisory support, and distributors pay them less attention because the small amounts do not generate sufficient income.
Despite the stock market experiencing a bull run in 2023 and 2024 when the main influx of new investors entered, it remained volatile over the last two years. Meanwhile, SIP accounts with higher amounts continued to grow across all categories, albeit slower and from a much smaller base. In FY26, accounts in the range of 1001–3000 rupees increased by 0.5% to 33.5 million, and in the range of 3001–5000 rupees by 2.8% to 14.4 million. The 5001–10000 rupee segment expanded by 5% to 6.2 million, and accounts with monthly contributions above 10000 rupees grew by 5.9% to 3 million.
Madan Sabnavis, Chief Economist at Bank of Baroda, suggested that the divergence in trends between different categories could be the result of a combination of factors. He stated that it is difficult to pinpoint one reason, but stock market volatility is likely a factor, as returns may not have met the expectations of some investors, especially those who entered recently. He also mentioned the possible movement of investors within the SIP base, as they transition from small to larger amounts as their income and investment opportunities grow.
Dindra Kumar, CEO of Value Research, believes that the decline in the small SIP segment does not necessarily mean investors are exiting mutual funds, but rather may indicate some loss of participants. He clarified that this is mainly a 'graduation' rather than an 'exit,' and that genuine outflow is also expected. He added that a small SIP started in a growing market without a specific goal is the easiest to stop when returns stabilize.
Distributors also noted a gradual shift of investors towards higher-amount SIPs. Aditya Agarwal, co-founder of Wealthy.in, reported that existing investors may increase their contributions as their incomes rise and financial literacy improves, and investors consolidate small SIPs into more substantial allocations. Manish Kotari, co-founder and CEO of ZFunds, agreed, calling it a natural process: investors start small and gradually move to larger SIPs as their income and investment confidence grow.