Regular vs direct plans: what every investor should know
Since 2013, every mutual fund scheme in India has been offered in two plans: a regular plan and a direct plan. Both invest in exactly the same portfolio and are managed by the same fund manager. The difference lies in how you buy them and what they cost.
Regular plans
A regular plan is bought through a mutual fund distributor. The AMC pays the distributor a commission, and this commission is included in the scheme's Total Expense Ratio (TER). As a result, the regular plan has a slightly higher expense ratio and a slightly lower NAV than the direct plan over time.
In return, the distributor handles KYC, paperwork, transactions, mandate issues, statement requests and other servicing for you.
Direct plans
A direct plan is bought straight from the AMC, through its website, an RTA platform or an exchange platform. There is no distributor commission, so the expense ratio is lower. You handle transactions and servicing yourself.
How to decide
The right choice depends on how comfortable you are managing paperwork and servicing on your own, and how much you value having a single point of contact. Neither option is right for everyone.
Our disclosure
Patni Investmart is an AMFI-registered Mutual Fund Distributor (ARN-135254). We distribute regular plans and receive commission from AMCs. The commission we receive is disclosed on our Commission Disclosure page and in your Consolidated Account Statement. You are always free to invest in direct plans.