Direct vs regular mutual fund plans: what the difference costs you

Every mutual fund scheme in India comes in two versions: a direct plan and a regular plan. They hold exactly the same shares or bonds and are run by the same fund manager. The only difference is the cost, and over the years that difference adds up to a lot.

• Regular plan: you invest through a distributor (a bank, broker or agent). The fund pays the distributor a commission every year, out of the fund's expenses.
• Direct plan: you invest straight with the fund house or through a platform that offers direct plans. There is no distributor commission, so the yearly expense ratio is lower.

Because the expense ratio is taken out of the fund's assets every day, the direct plan's NAV grows a little faster than the regular plan's, every single day.

For equity funds, the expense ratio of the regular plan is commonly 0.5 to 1.5 percentage points higher than the direct plan. For index funds and debt funds the gap is usually smaller. You can see each fund's direct-plan expense ratio on its page in our fund directory.

Suppose the fund's investments earn 12% a year before the plan's own costs make the difference: the direct plan delivers 12% and the regular plan 11% (a 1 percentage point gap).

Even a half-point gap (12% vs 11.5%) costs about ₹6.5 lakh on the ₹10,000 SIP over 20 years. The longer you stay invested, the more it compounds.

Because the commission pays for a service. A good distributor can help you pick suitable funds, handle paperwork and, most valuably, stop you from panic-selling in a crash. For some investors that behaviour coaching is worth more than the cost.

The question to ask is whether you are getting that service. If you only bought a fund once and never heard from the distributor again, you are paying every year for nothing.

If you want advice but lower costs, another route is a SEBI-registered investment adviser (RIA). RIAs charge you a fee directly and recommend direct plans, so their advice is not tied to commissions. A distributor and an adviser are different roles under SEBI rules.

• Look at the scheme name on your account statement (CAS from CAMS/KFintech or NSDL/CDSL). Direct plans include the word “Direct”. If it says “Regular” or neither, check with the fund house.
• Your statement also shows an ARN (distributor code) against regular-plan investments.

You can switch from the regular plan to the direct plan of the same fund. Before you do, know two things:

1. A switch counts as selling and buying. Gains on the units switched are taxed (12.5% on long-term equity gains above ₹1.25 lakh a year, 20% on short-term, as of 2025–26), and an exit load may apply to recent units.
2. A common approach is to start all new SIPs in the direct plan, and move old units over gradually, for example only units held over a year, and within the ₹1.25 lakh yearly tax-free limit for long-term equity gains.

• The fund house's own website or app.
• MF Central, run by the registrars CAMS and KFintech.
• Investment apps and brokers that offer direct plans (check the scheme name says “Direct” before you buy).

A direct plan is the same fund at a lower price. If you are comfortable choosing funds yourself, or pay an adviser directly, it is usually the better deal. If you rely on a distributor's ongoing help, make sure you are actually getting it. Compare the expense ratios of any two funds side by side in our comparison tool.

Yes. Because of the lower expense ratio, the direct plan's NAV is higher than the regular plan's and the gap widens every year. That's the difference in costs showing up.

No. Both plans hold exactly the same investments and carry the same risk. Only the cost differs.

You won't get a distributor's service, but you can still pay a SEBI-registered investment adviser for advice, or use the research and tools on sites like this one to compare funds yourself.

Not necessarily: a regular plan is a legitimate product. Just check you're getting ongoing help in return for the commission, and consider direct plans for new investments if you're not.

It's built into the regular plan's expense ratio. Compare the expense ratios of a fund's two plans: the difference is roughly what goes towards distribution each year.

This article is for education only and isn't investment or tax advice. Figures are illustrations at constant returns. Mutual fund investments are subject to market risks; read all scheme-related documents carefully. Tax rules checked October 2026.