Regular vs Direct Mutual Funds - What's the difference

Regular vs Direct Mutual Funds – What’s the difference ?

A Direct plan is something you purchase directly from the mutual fund provider (usually from their own website). A Regular plan, on the other hand, is something you purchase from an advisor, broker, or distributor (intermediary). The mutual fund firm pays a commission to the middleman in a regular basis. This is then recovered as a plan expenditure. A regular plan has a higher expense ratio in mutual fund parlance. Continue reading to learn more about Regular vs. Direct Mutual Funds.

What exactly are Direct Mutual Funds? 

Direct Mutual Funds are mutual funds that are sold directly by the AMC or fund company. In other words, no third-party intermediaries — brokers or distributors – are involved. There are no commissions or brokerage fees because there are no third-party agents engaged. As a result, a direct mutual fund’s expense ratio is lower. As a result of the decreased expenditure ratio, the return is larger. A mutual fund’s direct plan is easily identifiable since the term “Direct” is prefixed in the fund’s name. These mutual funds may be purchased both online and offline.

What exactly are regular mutual funds? 

Regular plans are mutual fund plans purchased through an intermediary. Brokers, advisers, and distributors are examples of intermediaries. For selling their mutual funds, the middlemen charge the fund house a fee. This charge is often recovered by AMCs through expense ratio. Regular mutual funds have a somewhat higher expense ratio than direct mutual funds. As a result, the returns on direct plans are somewhat greater. A regular plan is ideal for investors who do not have the market expertise or the time to manage their portfolio. As a result, a regular plan is considerably more convenient for investors who are unfamiliar with the market.

What Is the Distinction Between a Regular and a Direct Mutual Fund? 

SEBI introduced direct plans in mutual funds in 2012. This was done to allow investors to acquire mutual funds without going via a middleman. The same mutual fund manager manages both the direct plan and the regular plan. They also invest in the same assets. The main distinction is that under a regular plan, the fund company pays a commission as a distribution charge. There is no such commission or charge in the direct plan.

The table below compares the key differences between the regular and direct plans: 

According on the above comparison of Regular vs. Direct mutual funds, regular mutual funds are best suited for investors seeking financial guidance. Even if regular plans appear to be more expensive than direct mutual funds. The tiny percentage of extra cost is worth making the proper investment selection. As a result, as compared to an ignorant erroneous judgement, well-researched counsel might be more valuable.

ParameterDirect PlanRegular Plan
Third-PartyNot PresentPresent
ReturnsHigh (no additional fees to broker/agent)Low
Expense RatioLow expense ratio (no additional fees to broker/agent)High expense ratio
Market ResearchDone by SelfDone by advisor
Investment AdviceNot AvailableProvided by advisor

What are the Benefits of a Regular Plan vs. a Direct Plan in Mutual Funds? 

While traditional mutual funds have a little higher expense ratio and significantly lower returns, they provide a number of advantages.


Investing in a mutual fund is not as simple as it appears. An investor must evaluate his risk tolerance and financial needs. Then look for a mutual fund that meets these requirements. Finally, make an investment in a mutual fund. This is a time-consuming process. An intermediary will be familiar with the current mutual funds. And will assist in determining the optimum fit based on investor profiles. The direct strategy, on the other hand, lacks this. As a result, investing in a consistent plan is advantageous.

Professional guidance: 

Intermediaries are well-versed in the vast universe of mutual funds. As a result, may analyse an investor’s profile to determine the greatest fit for them. A skilled adviser can guide investors through their investing journey and even teach them about the market to help them achieve greater returns. As a result, only a regular plan provides the option for expert counsel. In a direct strategy, however, the investor must rely on his own understanding.

Portfolio monitoring and evaluation on a regular basis: 

Markets are ever-changing and dynamic. It would be difficult for an investor to keep up with the market on a regular basis. In a regular plan, intermediaries maintain watch of the market and routinely check their clients’ holdings. They also provide advice on restructuring when needed. Investors who choose a direct plan must devote time to monitoring their portfolio on a regular basis.

Services with additional value: 

Intermediaries offer a few extra services for the convenience of investors. For example, preserving a record of an investor’s investments, providing tax proofs during tax filing, facilitating redemptions, and so on. All of these services are not included in direct plans. A standard plan, on the other hand, includes all of these value-added services.

Which is better: a direct mutual fund or a regular mutual fund? 

The Direct and Regular plans are simply two variants of the same mutual fund strategy. It is managed by the same fund manager, and both invest in the same equities and bonds. The main distinction between the two is that the AMC pays commission to the broker as transaction fees or distribution expenditure for regular funds, whilst no such commission is paid for direct funds. This is due to the fact that when you invest through a direct plan, there is no intermediary and all related fees are avoided. As a result, direct plans have a lower expenditure ratio.

The NAV of the direct plan is greater than that of the conventional plan. Does this imply that adopting a direct plan is advantageous for investors? When investing, NAV should not be the only aspect to consider. Other considerations include whether you have the expertise to select the appropriate fund for you and if you have the necessary skills to manage your portfolio. If not, it is preferable to hire an adviser who will handle all of this for you at a very low fee. Despite the greater fees in regular funds, the total portfolio returns in regular funds would be higher owing to the advisor’s continual monitoring and rebalancing of the portfolio to create higher returns.

Who should invest in mutual fund direct plans? 

Direct plans are recommended for investors who want to deal directly with particular fund houses rather than through middlemen. Above all, direct funds can be invested in by individuals who have the ability and expertise to investigate mutual funds on their own. The investor should handle the complete application, documentation, tracking, portfolio review, compliance concerns, and so on. As a result, investors who wish to enhance returns by lowering expenses and have a solid understanding of mutual funds may consider investing in direct funds.


Which is better, regular or direct mutual funds? That is not the point here. Is it right for you? A direct mutual fund is best suited to an investing knowledgeable individual who has the market information, skills, and time to determine the finest mutual fund to invest in. The additional price for hiring an adviser is not worth it because it adds no benefit. While the majority of investors seek guidance with their investments. Those seeking such guidance might invest in the finest funds advised by their adviser. The money is subsequently put into a normal savings plan. Scripbox is one example of such an advising platform. It offers its investors a wide range of well-researched investment choices.

Written by
Sourav Suman

Sourav Suman

Blogger, currently pursuing B.A LL.B, Investor, and Personal Finance Enthusiast...


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