Direct Vs Regular Mutual Fund

  • 19 Feb 2024
  • Read 7 mins read

There are two variations of each mutual fund: ordinary mutual funds and direct mutual funds.

The fact that direct mutual funds do not have a distribution commission whereas standard mutual funds (MFs) do, is one of their main differences. Because of this, ordinary funds have a higher expense ratio. The ratio of the fund's total costs to its assets under management (AUM) is known as the expense ratio.

One of the advantages of direct mutual funds over ordinary ones is this. But keep in mind that investing through direct MFs is advantageous for investors for additional reasons than through ordinary MFs. 

When investing in mutual funds, you must make various options, one of which is whether to choose the Direct Plan or the Regular Plan. It's critical to grasp the distinctions between the two before making a selection.

Mutual Fund Direct Plans

Direct Plans are a type of mutual fund plan in which investors acquire units directly from the AMC, with no intermediaries involved. Direct Plans often have a lower expense ratio since there are no distribution charges. Here are some important elements of Direct Plans:

  • Purchased straight from AMC via its website or online channels.
  • Carry lower expense ratios since there are no distribution charges.
  • Suitable for those who can make investing decisions on their own and do not require expert assistance.
  • Has the potential to make larger returns over time due to reduced expenditure ratios.


Mutual Fund Regular Plans

Regular plans are a type of mutual fund scheme in which investors purchase units through intermediaries such as distributors or brokers. The AMC pays these intermediaries a fee for marketing mutual fund plans. The additional distribution effort raises the expenditure ratio in Regular Plans as compared to Direct Plan investments. Here are some important elements of Regular Plans:

  • Purchased through intermediaries known as distributors or brokers.
  • Carry greater expenditure ratios to cover distribution expenses.
  • Suitable for investors who need advice from mutual fund brokers or distributors on investing selections.
  • Returns will be somewhat lower due to greater expenditure ratios.

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Advantages of a Regular Plan over a Direct Plan in Mutual Funds 

Regular mutual funds have a somewhat higher expense ratio and marginally poorer returns, but they offer certain advantages.


Investing in a mutual fund is not as simple as it appears. An investor must examine his profile in terms of risk and financial demands. Then choose a mutual fund that meets these requirements. Finally, invest in mutual funds. This entire procedure takes time. An intermediary will be aware of the existing mutual funds. And will assist in determining the optimum fit based on the investor's characteristics. However, the direct plan lacks this. As a consequence, investing in a recurring plan is practical.

Professional Counsel

Intermediaries have an extensive understanding of the vast diversity of mutual funds. As a result, we can examine an investor's profile to determine the greatest fit for them. A trained adviser may guide investors through their financial journey and even provide market information to help them achieve greater returns. As a result, only regular plans have the option for expert guidance. However, with a direct strategy, the investor must rely on his understanding.

Regular Portfolio Monitoring and Review

Markets are dynamic and constantly evolving. As an investor, it would be difficult to keep up with the market regularly. In a regular plan, intermediaries examine the market and their clients' portfolios regularly. They also provide restructuring advice as necessary. Investors who choose a direct plan must set aside time to routinely review their portfolios.

Value-added Services 

Intermediaries offer a few more services for investors' convenience. Examples include maintaining track of investor investments, providing tax proofs for tax filing, facilitating redemptions, and so on. All of these services are not accessible in direct plans. On the other hand, a normal plan includes all of these value-added services.

Which is Better: a Direct Plan vs Regular Plan in Mutual Funds?

Direct and regular plans are mutual funds that share the same fund manager and invest in the same equities and bonds. Direct funds do not charge a broker commission since they eliminate middlemen and related costs, which results in a reduced expense ratio. Although direct plans have a greater net asset value (NAV) than regular plans, additional aspects such as expertise of fund selection and portfolio upkeep should be taken into account. If an adviser is not accessible, it is advisable to select a direct plan. Despite greater charges in regular funds, direct funds provide superior overall portfolio returns due to the advisor's ongoing monitoring and rebalancing. As a result, investors should not make their judgments solely based on direct plans.


Direct Plans and Regular Plans differ in terms of cost, applicability, and return potential. Direct Plans are appropriate for individuals who can make their own investing decisions, whereas Regular Plans are better suited for those who need assistance from brokers or distributors. Understanding the distinctions between the two can help investors make more educated decisions.

Frequently Asked Questions

Regular mutual funds are superior to direct mutual funds for investors with extensive market knowledge and time to invest, while direct funds are ideal for those seeking guidance and well-researched funds.


Expense ratios are typically lower in direct mutual funds because they don't involve distribution commissions, unlike regular mutual funds which include distribution expenses.


Direct mutual funds often yield higher returns over time due to their lower expense ratios compared to regular mutual funds, which may have higher expenses due to commissions.

Yes, investors can switch between direct and regular mutual funds. They can convert regular funds to direct funds by directly investing with the mutual fund company.

Investors who are well-informed about mutual fund investments and prefer lower expense ratios often opt for direct mutual funds. They may have the knowledge and confidence to manage their investments without intermediary assistance.