Stock Market · Mutual funds, deeper

Direct vs regular plans

Every mutual fund offers two versions: Direct and Regular. They invest in identical underlying stocks but have different costs. The difference compounds into huge sums over time.

The structural difference

• Regular plan: bought through a distributor (broker, bank, advisor). Distributor receives 0.5-1.5% commission yearly.
• Direct plan: bought directly from AMC. No distributor commission.

Same fund manager, same stocks, same NAV calculation. Only the expense ratio differs.

The math

Regular plan expense ratio: 1.5% per year

Direct plan expense ratio: 0.5% per year

Difference: 1.0% per year

Over 25 years on a ₹10 lakh investment:

• Regular plan (10% gross return − 1.5% expense = 8.5% net): ₹76 lakh
• Direct plan (10% gross return − 0.5% expense = 9.5% net): ₹95 lakh

[bars:Direct (0.5%)=95 L|Regular (1.5%)=76 L]

> The ₹19 lakh difference is what you paid your distributor for 'service', usually a few WhatsApp messages and basic recommendations.

Where to buy direct plans

• Any MF platform that sells Direct plans. Check the plan name on the order screen, it will say Direct
• The AMC's own website or app
• The industry utilities (MF Utility, MF Central), which cover every AMC in one account

When regular might make sense

• You're completely new and need hand-holding from an advisor
• The advisor genuinely adds value (rebalancing, goal planning, behavioural coaching)
• The ₹19 lakh difference is acceptable for the service

So the question isn't which plan is better in the abstract. It's whether you're getting ₹19 lakh of service. If someone is genuinely rebalancing your portfolio and stopping you from panic-selling in a crash, that's worth paying for. If the relationship is a few WhatsApp messages a year, you're funding it either way.

Takeaway. Direct plans run 0.5-1.5% cheaper than regular plans, which compounds to roughly 25% more wealth over 25 years. That gap is the price of the distributor. Worth paying only if the distributor is doing work you would otherwise pay for separately.