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Direct Plan Vs Regular Plan

December 1, 2021
Mutual Fund

There is a big hoo-ha in the market & media now a days related to “direct plans”.
What is a direct plan? How does one benefit from a direct plan? And compared to regular plan, which is better?


Below is the table showing the major differences for regular plan vs direct plan
From the above Regular vs Direct mutual funds comparison, regular mutual funds are best suited for investors who seek financial advice. Even though regular plans seem costly when compared to direct mutual funds. The small percentage of the additional cost is worth the right investment decision. Therefore, compared to an uninformed wrong decision, well-researched advice can earn higher value.

Parameter Direct Plan Regular Plan
Not Present
Expense Ratio
Less expense ratio (no additional fees to broker/agent)
More expense ratio
Market Research
Done by Self
Done by advisor
Investment Advice
Not Available
Provided by advisor

Which is better?

From above explanation, definitely direct plan is better, as ultimately it impacts on the ROI (return on investment), which becomes higher due to less cost annually.


However, the comparison is not that simple. In a way, the difference is like a fee you pay to your doctor, lawyer or CA for their professional advice. Where you also have an option of going on your own thru self-use websites, with zero or fraction of the cost. Whether you should pay that fee or not depends on the investor’s own capability and the quality of service you get.


What are you getting when you invest through a regular plan?

1. Investment recommendations: How to shortlist the right scheme, its comparison with its peers & other parameters from 100’s of MF schemes available in the market. In short, this is what an advisor offers, which is very critical for any investment. The plan (regular or direct) is a secondary consideration.


2. Investment services such as periodic review: By reviewing your portfolio and helping you rebalance, your advisor would further improve the performance of your holdings and get you more return.


3. Additional services like facilitating your investment & tracking your portfolio: This is not simply a question of saving time and effort. Most people simply won’t do it and neglect their portfolios resulting in poor returns and, sometimes, even lost money because they don’t have a record of their investments.
So, if you are a diligent investor with deep knowledge, meaning that you can pick and track your own mutual funds, then the direct plan is better.
But for most of us, however, we require sound & balanced recommendation, which needs to be supported with a technology platform, such that one can manage, track & execute investments with ease. In short regular plan is better.

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