Groww Demat Mutual Funds: Should You Switch or Stay?

Confused about Groww Demat Mutual Funds? Know if you should switch or stay with SoA, understand costs, pros, cons, and safe alternatives in simple language.

One of India’s popular investment apps, Groww, recently announced that from June 2025 onwards, all new mutual fund investments through their platform will be held in demat form by default. Existing SIPs will continue in the traditional format, but you can choose to convert them too.

This sudden change has confused many investors — should you really move your mutual fund holdings to demat? Or stick with the simple Statement of Account (SoA) format? Let’s break this down in plain language.

Groww Demat Mutual Funds: Should You Switch or Stay?

First, what does this shift mean?

New investments on Groww are by default in demat form.

Existing SIPs will remain in SoA but can be moved to demat with your consent.

You can opt out of the demat format using an OTP process.

If you wish to revert your demat units to SoA, it’s possible but involves paperwork and time.

What you must watch out for

Limited Access:
Units held in demat form cannot be accessed through MF Utility (MFU) or MF Central, which are free and robust platforms to manage multiple AMC folios at one place. SoA units are easily trackable and manageable using RTA websites like CAMS and KFintech, or the MFU portal.

Gifting & Transfer:
Earlier, gifting or transferring mutual fund units in SoA form wasn’t easy. But now, with MF Central, this has become simple. So, this benefit exists even in SoA.

Speculative Use:
When you hold mutual funds in demat, you can pledge them for margin and trade in the stock market. While this may look attractive, it encourages risky behaviour that mutual fund investing ideally avoids.

SoA vs Demat: Which is better?

Refer to my detailed post on this “Should You Hold Mutual Funds in Demat Form? Pros & Cons“.

Feature	SoA	Demat
Cost	Free	Brokerage/DP charges may apply
Nomination	Separate for each AMC	Single nomination for entire demat
Access	MFU, MF Central, RTAs	Broker platform only
Gifting/Transfer	Allowed via MF Central	Allowed
SWP/STP	Fully supported	Fully supported
Margin	Not available	Can pledge for loans/margin

Why I prefer SoA

Having advised thousands of investors, I believe simplicity and flexibility matter most. SoA gives you that. You can directly transact through the AMC’s own website, CAMS, KFintech or MF Utility — all without any extra DP or brokerage charges. If your broker’s demat platform goes down or if you lose access, you’re not stuck because your units are directly with the AMC.

In demat form, if your broker or DP has issues, you may find it harder to transact. Also, not all brokers fully support features like SWP (Systematic Withdrawal Plan) in demat yet. For retirees, this is a major drawback.

What should you do now?

Before switching blindly, think about why you invest in mutual funds. For most, the goal is long-term wealth creation, not frequent trading. SoA keeps it simple, cost-effective and transparent. Demat makes sense if you’re already using it for shares and ETFs and want to consolidate everything in one place — but for purely mutual funds, SoA is still the cleanest choice.

Personally, I never trust these brokers or third-party websites. Because we don’t know when they change their colour 🙂

Choose wisely and invest smartly!