Direct vs Regular Mutual Funds

Direct vs Regular Mutual Funds

Which One Should You Choose in 2025?

When investing in mutual funds, one of the first choices you must make is between a Direct Plan and a Regular Plan. While both options offer access to the same mutual fund schemes, the route you take impacts your returns, costs, and level of assistance.

This article breaks down the differences between direct and regular mutual funds and helps you decide which option best aligns with your investment goals.


๐Ÿงพ What Are Direct and Regular Mutual Fund Plans?

Plan TypePurchased ThroughCommissionWho Manages?
DirectAMC website or direct platformsโ‚น0 (No commission)You manage yourself
RegularThrough an advisor/distributorCommission included in expense ratioAdvisor assists

โœ… Key Differences Between Direct and Regular Mutual Funds

FeatureDirect PlanRegular Plan
ReturnsHigher (no commission deducted)Slightly lower (due to commission)
NAVHigher NAVLower NAV
Expense RatioLowHigh
Advice/SupportNot availableDistributor/Advisor support available
PlatformAMC websites, Direct Apps (Zerodha Coin, Kuvera)Banks, MF Distributors, FinTech platforms
Best ForInformed investorsBeginners or those needing advice

๐Ÿ’ฐ How Do Returns Differ?

Hereโ€™s a quick example:

If you invest โ‚น1,00,000 in a mutual fund that gives 12% annual returns:

  • Direct Plan (expense ratio 1%): Effective return โ‰ˆ 11%
  • Regular Plan (expense ratio 2.25%): Effective return โ‰ˆ 9.75%

Over 10 years, this difference can result in โ‚น25,000โ€“โ‚น50,000 or more in gains!


๐ŸŽฏ When Should You Choose a Direct Plan?

Choose Direct Mutual Funds if:

  • You have basic financial knowledge
  • You’re confident in comparing and selecting funds
  • You want maximum returns by saving on commission
  • You use platforms like Zerodha Coin, Groww (Direct), Kuvera, or AMC websites

๐Ÿง‘โ€๐Ÿ’ผ When Should You Go for a Regular Plan?

Choose Regular Mutual Funds if:

  • You need personalized guidance
  • You prefer handholding and portfolio advice
  • You are investing for the first time
  • You trust your financial advisor or distributor to guide you

๐Ÿ“ฑ Platforms for Investing

Direct Mutual Fund PlatformsRegular Mutual Fund Platforms
Zerodha CoinICICI Direct, HDFC Sec
Groww (Direct mode)Banks (SBI, Axis, etc.)
AMC websites (e.g., SBI MF)Offline MF agents
Kuvera, Paytm MoneyOnline distributors

โœ… Pros and Cons Summary

CriteriaDirect PlanRegular Plan
ProsLow cost, higher returns, full controlEasy guidance, expert support
ConsNo support, DIY requiredHigh cost, lower returns

๐Ÿ“ˆ Which Plan Should You Choose in 2025?

  • ๐Ÿ’ก If you are a self-learner, tech-savvy, and want to maximize returns โ€“ go Direct
  • ๐Ÿ’ก If you prefer expert guidance or lack time to manage investments โ€“ go Regular

You can even start with a regular plan, and switch to direct once youโ€™re confident (note: exit loads and tax implications may apply).


๐Ÿ”– Frequently Asked Questions (FAQs)

Q1. Can I switch from regular to direct mutual fund plan?
Yes, by redeeming units and reinvesting or through online platform transfers (subject to taxation and exit load).

Q2. Is there a risk difference between the two?
No, the underlying mutual fund is the same. Only cost and returns differ.

Q3. How much commission do advisors get in regular plans?
Generally, 0.5% to 1.5% annually, deducted from your returns via the expense ratio.

Q4. Which gives higher NAV โ€“ Direct or Regular?
Direct plans always have a higher NAV because they exclude distribution commission.

Q5. Can I invest in SIP through a direct plan?
Yes, SIPs are available in both direct and regular plans.


๐Ÿง  Final Thoughts

Both Direct and Regular Mutual Funds have their place in a smart investorโ€™s toolkit. Your choice should depend on your financial knowledge, comfort with online tools, and need for personalized guidance.

๐Ÿ‘‰ If you want to save costs and maximize returns โ€” go Direct.
๐Ÿ‘‰ If you want expert support and simplicity โ€” go Regular.

Either way, mutual fund investing is a smart move toward long-term wealth creation.


Direct Vs Regular Funds

Understanding Regular and Direct Mutual Funds