Difference between Direct and Regular Mutual Fund Plans


In simple laymen's term, Direct Plan is those schemes which do not entertains any distributors in between the investor & the Mutual Fund house. On the other hand, the regular plan is those which are garnered by a mutual fund distributor or an agent who gets some commission for selling the fund to investors. Such commission falls at the end of the Fund house and this increases the fund's expense ratio.


Looking at the overall context, there won't be any significant changes in both the plans as in most cases the fund manager remains the same.

When it all started?

Effective from 1st Jan 2013, all Mutual Fund Houses opened Direct Mutual Funds Schemes as under the guidelines of SEBI. This was done to generate more revenue and allow investors to invest on their own. This marked the separation of direct and regular plans along with their NAVs.

So what is the hype about?

Most people think that if they invest in Direct Plans they will be able to save some part of the profit in their plans. But they forget the most crucial thing which is the portfolio building process. A portfolio basically comprises of all goals, planning, expenses, long term, short term, risk and many more factors that are all managed by a professional Mutual Fund distributor of Financial Advisor. Here you get professional & customized advisory services.

In direct plans, you would be the sole responsible person for the fund selection as there won't be any advisor in between & you would be selecting funds based on your own research & limited knowledge. It is best for those who inhibit good knowledge of funds & markets. The direct plan makes sense only when the investor is well aware of the portfolio, market conditions & has got plenty of time to review & check his / her portfolio over the Online Mutual Fund. If you are inexperienced, it would be better to seek advice from a financial advisor.

Professional advice in Regular funds can create a huge difference in the returns generated. The financial advisor will entertain all your needs & create the best portfolio for you, will suggest best performing Mutual Funds, will keep regular monitoring over funds & help you churn your portfolio when required. The advisor will also make you understand different types ofMutual Funds. This will help you in saving time & effort.

Most people think that investing in Direct funds will attract better returns at a low cost. But one should always remember low cost is never the sole criterion of fund selection. 


Location: Mumbai, Maharashtra, India

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