Groww changes tack, now offers regular mutual funds via Prime

Groww, the country’s largest stockbroker by active users, has started offering regular mutual funds under its Groww Prime platform. Launched early this year to select customers, the product has been rolled out to its two-crore strong customer base.

The Bengaluru-based wealth-tech platform has only offered direct mutual funds on its platform until now.

Direct mutual funds require customers to research and select funds themselves. Meanwhile, regular mutual funds pay commissions to distributors, such as wealth management firms, portfolio management services (PMS), and stockbroking platforms, which recommend funds to their customers while earning commissions.

This move marks a significant shift for Groww, which has long championed direct plans for their potential to deliver higher returns. It has consistently argued that, over a long investment horizon, the difference in returns between direct and regular plans can be significant for investors.

“Another product, not a strategic shift”

Groww said that Prime is an introduction of another product on its platform, not a replacement for what already exists.

“It is not a shift in our philosophy—it is an additional option for investors who want support as their needs evolve,” Groww said in response to Moneycontrol queries.

“DIY works well for many of our customers, and we remain DIY-first. Customers who prefer investing in direct mutual funds on their own can continue to do so exactly as before. We see this as a meaningful next step in serving a wider range of investor needs. As investors evolve, their expectations evolve too,” the company added.

This also marks a departure from Groww’s long-held stance on mutual fund distribution. In 2019, two years after its founding, the company switched from offering regular mutual funds to zero-commission direct plans, making direct funds the default option across its platform.

Explaining the decision in a blog post at the time, Groww said it had initially launched with regular plans because it believed the commissions on smaller investments were too insignificant to materially affect investor returns. However, as customers’ portfolios grew, so did the impact of those commissions.

“Commission starts to impact the returns in the long term. That is not fair. And not aligned with our principle of being the most customer-focused company in India,” the company wrote, adding that all mutual funds searched, analysed or purchased on Groww would henceforth be offered as direct plans by default.

Since then, the Bengaluru-based company has gone on to become India’s largest brokerage by active investor count, evolving into a comprehensive wealth-creation ecosystem catering to a diverse demographic across income, age and geography.

The shift in long-term strategy comes as Groww gradually transitions towards an advisory and wealth platform, especially after the acquisition of Fisdom.

Groww said that Prime provides mutual fund recommendations based on a customer’s risk profile, investment horizon, and financial goals.

The new age wealth-tech platforms like Zerodha, Groww, Upstox, Paytm Money and Dhan often differentiated themselves from the traditional investment platforms, arguing that the distributor commission often compromises the platform neutrality.

In response to Moneycontrol queries, Groww said that over the years, one of the most common requests it received from customers has been around how they can choose which mutual funds to invest in.

“They wanted guidance on not just how to choose, but also how to manage their mutual funds – what to buy, what to hold, when to exit, and when to rebalance. We think there will be customers who are fully DIY and there will be customers who need assistance,” the company said, adding that Prime will be one of the several investment products that it offers to customers.

If a customer chooses to activate Groww Prime, all their future mutual fund investments will be made through regular mutual funds instead of direct mutual funds.

To be sure, customers can switch back to the classic direct mutual fund experience again. But they cannot do it twice in six months. This is only to avoid customers constantly shifting every week or month.

According to the May 2026 PwC-FICCI report on financial distribution, the share of mutual fund assets under management (AUM) held for more than five years increased from 6.3 percent in March 2020 to 15.7 percent in March 2024.

To be sure, long-term holdings still account for a minority of assets. Among systematic investment plan (SIP) investors, 23 percent of assets in regular plans are held for more than five years, compared with 12 percent in direct plans.

“DIY investing platforms solved for discovery and transactions, but long-term outcomes are often shaped by behaviour—whether investors continue their SIPs during corrections, avoid chasing recent returns,” said Aditya Agarwal, cofounder of Wealthy.in, a wealth management platform.

Agarwal added that customers tend to choose funds that performed well recently, a bias that often results in sub-optimal allocation.

While Groww continues to report high revenue growth, the company is possibly under pressure to monetise its large customer base, said Srikanth Meenakshi of PrimeInvestor, a PMS firm.

“MF investors (using direct plans) predominantly do not use a stockbroker’s other services, which means they are not revenue-generating and are costing the business. The only way to monetise them is to upsell them with advisory and research services and offer them regular plans,” Meenakshi said.

While DIY investment platforms did an excellent job of bringing millions of first-time investors into mutual funds, it is quite different from helping them build long-term wealth, he added.

Groww said that it was not looking to increase ARPU or monetise its large customer base with Prime, but rather to add another product to help customers build wealth with guidance, if they choose to.

This strategic pivot comes at a critical juncture, with domestic markets stagnating for nearly two years and heightening global geopolitical tensions causing many DIY investors to abandon their direct plans.

Even as monthly SIP contributions demonstrated resilience, exceeding Rs 30,000 crore in most months this year despite market turbulence, the SIP stoppage ratio surged past 100 percent in March. It hovered at 97.6 per cent in April. This elevated ratio, which signals that cancellations outpaced new registrations, underscores the sentimental reactions of DIY investors grappling with global geopolitical anxieties.

In many instances, individual returns significantly trail fund performance as emotional reactions to market turbulence drive sub-optimal entry and exit decisions.

“Investors increasingly need a combination of digital convenience, research-backed recommendations and human guidance,” said Agarwal of Wealthy.in, adding that the future of wealth management will be a hybrid model where technology simplifies investing while empowering distributors with research, data and AI-driven insights.