We use cookies
We use cookies to help this site function, understand service usage, and support marketing efforts. Visit Cookie Policy to change preferences anytime.
Regular and direct plans of a mutual fund hold the exact same portfolio — the only difference is cost. Direct plans skip the distributor commission, so their expense ratio runs 0.5% to 1% lower per year, which compounds into a real gap in your final corpus over time. But a regular plan is only a bad deal if you're paying that extra cost for nothing — the real question is whether you're getting genuine guidance for it.
Direct plans of mutual funds have a lower expense ratio than regular plans of the same fund. This is because no distributor commission is built into the cost. Over a long investment horizon, this difference — typically 0.5% to 1% per year depending on the fund category — can translate into a meaningful gap in your final corpus.
In short: But lower cost isn't the same as better outcome. That depends on whether you're getting useful guidance in a regular plan, and whether you're actually making good investment decisions on your own in a direct plan.
When SEBI introduced direct plans in 2013, it required every mutual fund to offer two versions of every scheme: a regular plan and a direct plan.
Regular plan: You invest through a distributor — a mutual fund distributor (MFD), a bank, or an online platform that earns a trail commission. This commission is built into the fund's Total Expense Ratio (TER), which means it comes out of your returns.
Direct plan: You invest directly with the AMC (fund house) — through their website, AMFI's MF Central, or direct-plan platforms. No distributor is involved. No commission is paid. The fund's expense ratio is lower as a result, and a slightly higher NAV compounds over time.
Both plans hold the same underlying portfolio. The same fund manager, the same stocks or bonds, the same investment strategy — the only difference is the cost layer.
The expense ratio difference between regular and direct plans varies by fund category. As a general pattern:
| Fund Category | Typical Regular TER | Typical Direct TER | Approx. Gap |
|---|---|---|---|
| Large-cap equity | ~1.5–1.7% | ~0.7–1.0% | ~0.5–0.8% |
| Flexi-cap / mid-cap equity | ~1.7–2.0% | ~0.8–1.1% | ~0.8–1.0% |
| Debt / liquid funds | ~0.4–0.8% | ~0.1–0.3% | ~0.2–0.5% |
| Index funds | ~0.3–0.6% | ~0.1–0.2% | ~0.1–0.3% |
The figures above are illustrative ranges based on general market patterns. Actual TERs (Total Expense Ratios) vary by fund and AMC and are disclosed in each fund's scheme information document. Always verify current TERs on the AMFI or AMC website before making decisions.
Percentage differences can feel abstract. So let's look at what a 0.75% annual TER (Total Expense Ratio) gap actually means for a real investment over time.
Consider two investors — both running a ₹5,000/month SIP in equity funds. One invests in a regular plan. The other chooses the direct plan of the same fund. Both earn the same gross return from the portfolio. The only difference is the expense ratio.
| Illustrative Scenario — ₹5,000/month SIP | Regular Plan | Direct Plan |
|---|---|---|
| Gross return assumption | 12% p.a. | 12% p.a. |
| TER | 1.75% | 1.00% |
| Net return | ~10.25% p.a. | ~11.00% p.a. |
| 10-year corpus (approx.) | ₹10.2 L | ₹11.1 L |
| 15-year corpus (approx.) | ₹20.8 L | ₹23.5 L |
These figures are illustrative only, calculated using standard SIP compounding formulas. They do not account for variable returns, tax events, or market volatility. The gap widens with higher SIP amounts and longer time horizons.
The longer the holding period, the more pronounced the gap becomes. This is simply compounding at work — a 0.75% annual drag doesn't just cost you 0.75% each year; it costs you 0.75% on a growing corpus, which means the rupee impact keeps getting larger as the years go by.
This is why the regular-vs-direct debate matters more for long-term equity investments than for short-duration debt or liquid funds, where TER (Total Expense Ratio) gaps are smaller and holding periods are shorter.
Not necessarily. The commission built into a regular plan pays for a service — and like any service, whether it's worth paying for depends on what you actually receive.
You're likely getting value in a regular plan if...
Regular plans are likely costing you without payback if...
The key question isn't "regular or direct?" — it's "am I getting something for the extra cost I'm paying?" If the answer is yes, regular plans can be a perfectly rational choice. If the answer is no, that's when the math starts to hurt.
Technically, yes. But "switching" a regular plan to a direct plan is not a transfer — it is a redemption and a fresh purchase. That has consequences.
Before you switch, check these
For many investors with older, long-term SIP portfolios, the switching cost is actually quite low — especially if units have been held long enough to be LTCG-eligible and gains are within the exemption limit. But for someone who recently started and has significant STCG exposure, switching immediately is rarely worth it.
A pragmatic approach: stop fresh SIPs in the regular plan and start new ones in direct. Let older units continue until they clear LTCG eligibility before redeeming.
Here is a straightforward three-step framework:
The regular-versus-direct question is hard to answer in the abstract, because it depends on numbers only your own portfolio holds — what you actually pay in TER (Total Expense Ratio) today, how old your units are, and whether the advice you receive has changed any decision you've made. Dhan Saarthi starts there: mapping your existing holdings, the plan type behind each one, and the rupee cost difference you are carrying every year.
From there, the decision becomes concrete rather than ideological. You see where a switch is worth the exit load and tax it would trigger, where a staggered move makes more sense, and where a regular plan is genuinely earning its cost through guidance you are actually using. The aim is clarity on what your portfolio costs and what it delivers — not a push toward one plan type.
Regular and direct plans hold the same portfolio and differ only in cost — so this is a question of cost versus value, not which plan is universally better. Direct plans suit investors who manage their own funds and stay disciplined; regular plans earn their premium only when the advice behind them is real. Check your TER (Total Expense Ratio) gap in rupees, be honest about what you're getting for it, and weigh exit loads and tax before switching.
Direct plans can be purchased through the AMC's own website, through AMFI's MF Central platform, and through several SEBI-registered investment adviser (RIA) platforms and fee-based platforms that route transactions in direct plans. Ensure the platform you're using is actually routing to direct plans — some platforms charge their own advisory or platform fee on top of direct plans, which partially offsets the TER savings.
Yes. Because the switch involves redeeming your regular plan units and purchasing new direct plan units, your tax holding period resets to zero for the new units. This is one of the most important practical considerations before switching, particularly if your units are close to becoming LTCG-eligible or if you're sitting on large short-term gains.
Yes. Direct and regular plans of the same scheme invest in exactly the same portfolio. The fund manager, the securities held, the investment mandate, and the scheme objectives are all identical. The only difference is the expense ratio, which results in a slightly different NAV. The direct plan's NAV will be higher over time due to the lower cost drag.
Yes — SEBI-registered investment advisers (RIAs) charge a direct advisory fee and route investments through direct plans. This separates the advice cost from the fund cost. Depending on the fee structure, this can work out cheaper than a regular plan for large portfolios, while still giving you professional guidance. It's worth comparing total cost — advisory fee plus direct plan TER — versus regular plan TER alone for your portfolio size.
It depends on how long you've held those units, what the tax position is, and whether the goal has a long enough runway for the TER saving to materially compound. If the goal is 10–12 years away and you've just started, redirecting new SIPs to direct while holding existing units makes practical sense. If you're 2–3 years from the goal, switching and resetting the tax clock may actually be counterproductive. Run the numbers for your specific situation.
Most people don't hire a doctor, a chartered accountant, or a lawyer without asking a few pointed questions first — about credentials, exper…
Yashna Bhuwania
11 Sept 2026
Most people who invest in mutual funds through a bank, an app, or an agent have never actually asked what that person or platform is doing b…
Mahak Jain
11 Sept 2026
If you invest through a regular plan or work with a Mutual Fund Expert, some part of your money is going toward advice — every year, whether…
Yashna Bhuwania
11 Sept 2026