Hello Readers! 

How are you all? Have you started your investment in mutual funds or planning to invest, wait are you also confused, what to choose, between Regular Plan and Direct Plan in Mutual Funds?

If yes, then no need to bother, today through our blog we are going to discuss the two different investment plans in Mutual funds, Regular Plan and Direct Plan, the differences between the two, and why Regular Plan should be preferred over Direct plan.

Read our blog and get to know everything about the Direct Plan and Regular Plan.


A Regular Plan in Mutual Funds is an investment plan that an investor purchase through a mutual fund broker, distributor, or advisor, in return the AMC (Asset Management Company) or the Fund House, pays a kind of commission to the brokers, distributor or advisors, for every new investor that they introduce to the investment plans in the AMC’s. If simply, we say, then the mutual fund brokers or advisors, act as the middleman in between the investors and AMC’s. The commission paid to the mutual fund brokers by AMC’s is added to the expense ratio of the mutual fund scheme in which the investor is investing, by the AMC’s. This basically increases the Total Expense Ratio charged to the investors on their funds.   


A Direct Plan in Mutual Funds is an investment plan that an investor purchases directly through the AMC, and doesn’t involve middlemen like mutual fund brokers, or advisors. No role of brokers and advisors make the investors free from commission or distribution fees, which in turn lowers the expense ratio on their investment plan. Even when they start a SIP or make a lump sum investment, AMC’s do not levy any transaction charges as they are directly dealing with the mutual fund company.


Regular and Direct plans are just the two options to buy the same mutual fund scheme, run by the same fund managers who invest in the same stocks and bonds, but these plans do have differences that I am listing below:

1.Expense Ratio

Direct plan: When the investors opt Direct Plans for their investment in mutual funds, in that case, AMC’s do not pay any sales commission, to the mutual fund brokers, and hence investors pay a low expense ratio, to the AMC’s.

Regular Plan: When the investor opts Regular Plan for their investment in mutual funds, they invest in AMC’s Funds via an intermediary, for which the AMC pays a sales commission to the intermediary, which is included in the investor's expense ratio. Thus, an investor investing through Regular plan, pays a bit more expense ratio, on their investment plan, as compared to the Direct plan.

2.Professional Guidance

Direct Plan: Direct plan, do not involve guidance from experts and professionals in your investment. in short, it is a kind of DIY (Do It Yourself) Investment.

Regular Plan: Regular plan, involves experts and professionals guidance, in your investment, not only guidance but your funds are under the expert’s regulation in a regular plan.

3.NAV (Net Asset Value)

Direct Plan: Direct plan of mutual fund schemes, generally cost a bit high NAV than compared to regular plans.

Regular Plan: Regular Plan of Mutual fund schemes, generally cost a low NAV, then compared to Direct plans.

Observe the following table depicting the differences between Direct Plan and Regular Plan:


  1. Professional Advice: The most valuable advantage of Regular plan over Direct plan is the availability of Experts Advice. There are many investors who can carry their investment routine, on their own, but the investment is not the tea of everyone’s cup. Many new investors join mutual funds on a regular basis, and being new to the market, they need expert advice, so it is advisable, for them to invest in Regular Plans.

Professional Advisor understands your investment profile and risk appetite and guides you accordingly. A certified financial expert can save you plenty of time by picking the best plan to suit your requirements.

  1. Convenience: We know that direct plans mean less expense ratio, but at the same time, direct plans demands, investor quality time and effort, which sometimes become hectic and unmanageable for the investor. In Direct Plans, an investor has to analyze the funds, compare the funds and choose the best fund as per their requirement, on their own, but in a regular plan, the intermediary will already have an understanding of all these.
  2. Regular monitoring: Investing through Direct Plan, the investor needs to review his portfolio on a regular basis, that may not be possible every time for an investor, as he has other necessary things to handle, whereas, in regular plan, the distributor reviews your portfolio returns and help you re-balance the asset allocation, as required. This management service provided by experts is paid by the expense ratio charged to the investors, thus high expense ratio in the regular plan is justified.

As of now you are aware with the concepts of Direct Plan and Regular Plan in mutual funds, you also know, why it is advised to invest in Regular Plan of Mutual, so rather getting confused between the two, plan your investment and invest in Regular Plan of mutual fund schemes, this will help save your time, effort and energy. This will help you carry out your investment process with a good strategy and generate good returns for you. 

Most importantly, always consult a financial planner or advisor, before starting your investments. They will help you select the best fund, for your investments as per your requirement.

You can also contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.

Happy Investing!

(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).