Money Basics · SIPs & mutual funds

Direct vs regular plans

Every mutual fund in India exists in two identical versions: Direct and Regular. Same fund, same manager, same stocks. One quietly pays a commission out of YOUR money forever. Most people don't know which one they own.

The difference

• Regular plan, bought through a distributor (bank RM, insurance agent, some apps). The fund pays the distributor ~0.5-1% of your money EVERY YEAR as commission, baked into a higher expense ratio.
• Direct plan, bought straight from the fund, or through any platform that sells Direct. No middleman, no commission, lower expense ratio. Nothing else differs.

"It's just 1%"

₹10,000/month SIP for 25 years at 12% vs 11% (the 1% drag):

₹1.88 croredirect plan at 12%

₹1.58 croreregular plan at 11%

₹30.27 lakhwhat the commission cost you

That's not a fee. That's a flat in tier-2 India, transferred to a distributor for forwarding you a form once.

> Why does your bank's 'relationship manager' keep recommending funds? The commission. He isn't your advisor. He's a salesman whose product costs you ₹30.27 lakh.

Check what you own (2 minutes)

Open your MF statement. Every fund's name literally says it: "XYZ Flexi Cap Fund - Direct - Growth" or "- Regular -". If it says Regular, you can switch to Direct (note: a switch counts as sell + buy, so check exit load and capital gains first, often still worth it).

The difference is the distributor commission built into the Regular plan's NAV. The same fund, same manager, same holdings, roughly 0.6–1.0% a year apart. Over a decade that gap compounds into real money.

Takeaway. Same fund, two versions: Regular pays your distributor ~1%/year from your money. ₹30.27 lakh over a 25-year SIP. Direct is the identical fund with that commission stripped out.