When investing in mutual funds, one of the first choices you’ll face is whether to go with a Direct or Regular plan. Both options offer access to the same fund schemes but differ significantly in how they are accessed and the cost involved. Let’s break them down to help you choose the right one.
What Is a Direct Mutual Fund Plan?
A Direct Mutual Fund is a type of fund that investors purchase directly from the Asset Management Company (AMC) without any broker or agent. You can invest through the AMC’s official website, mobile app, or by visiting their branch. You may also take help from a SEBI-registered Investment Advisor.
Since there’s no distributor involved, the expense ratio is lower, which allows investors to potentially earn better returns over the long term.
What Is a Regular Mutual Fund Plan?
Regular Mutual Funds are accessed through intermediaries like distributors, banks, or advisors. These professionals guide investors in selecting funds based on their goals, risk profile, and market outlook.
They handle formalities such as KYC, documentation, and application submissions. In return, they receive a commission from the AMC, which is included in the fund’s expense ratio.
Direct vs Regular Mutual Funds – Key Differences
| Feature | Direct Plan | Regular Plan |
|---|---|---|
| Expense Ratio | Lower – no intermediary commission | Higher – includes distributor commission |
| Investment Channel | Directly through AMC platforms | Through broker, bank, or advisor |
| Investor Support | Requires self-research and execution | Guidance provided by experts |
| Returns | Higher due to lower costs | Lower due to commission fees |
| NAV | Higher NAV due to reduced expenses | Lower NAV due to added costs |
Why Many Investors Choose Regular Mutual Funds
Even though direct plans offer better returns, many investors—especially beginners—prefer regular plans for the added convenience and expert assistance they offer:
- Professional Advice: Advisors help identify funds tailored to your profile and financial goals.
- Ease of Investment: They handle the entire investment process, making it less stressful.
- Portfolio Monitoring: Experts track market trends and recommend changes as needed.
- Goal-Oriented Planning: Custom investment strategies based on life goals.
- Extra Services: Includes tax-proof documentation, account statements, and support.
How to Identify a Direct or Regular Mutual Fund
- Scheme Name: Direct funds have “Direct” or “Dir” in the name; Regular funds will include “Regular” or “Reg.”
- Consolidated Account Statement (CAS): If the ‘Advisor’ or ARN field contains a distributor number, it is a Regular plan. If not, it’s a Direct plan.
Which One Should You Choose?
Your decision should depend on your investment knowledge and comfort level:
- Go with Direct Plans if:
- You have experience and can analyze mutual funds independently.
- You want to maximize returns by reducing costs.
- Choose Regular Plans if:
- You’re new to investing and prefer guidance.
- You need help managing paperwork and market tracking.
In some cases, a combination of both might be ideal—for example, using Direct plans for well-known funds and Regular plans for lesser-known, complex ones where guidance helps.
How to Start Investing in Direct or Regular Mutual Funds
Whether you opt for direct or regular, starting your investment journey is simple:
- For Direct Plans: Visit the fund house’s website or app, complete KYC, and invest directly.
- For Regular Plans: Sign up through a distributor, bank, or platform like Groww, Paytm Money, or ICICI Direct. They’ll assist with everything from KYC to fund selection.
Start with a small amount, keep your KYC updated, and invest regularly for long-term growth.
Final Thoughts
Understanding the key differences between Direct and Regular Mutual Fund plans allows you to invest more wisely. If you’re confident and cost-conscious, Direct is for you. If you value convenience and expert advice, Regular might serve you better.
Bonus Tip: Many investors successfully use a mix of both, depending on their comfort level and the complexity of each fund. What matters most is staying consistent with your goals and monitoring your progress.
Further Reading Suggestion:
A Beginner’s Guide to Mutual Funds
CAS: Consolidated Account Statement
Disclaimer
“This article is for educational purposes only. Read our full disclaimer .”
FAQ on Direct and Regular Mutual Funds
A Direct Mutual Fund is a type of fund that investors purchase directly from the Asset Management Company (AMC) without any broker or agent.
Regular Mutual Funds are accessed through intermediaries like distributors, banks, or advisors. These professionals guide investors in selecting funds based on their goals, risk profile, and market outlook.