Direct vs Regular Mutual Funds: Which Wins?
When you invest in a mutual fund, you can choose two routes — direct or regular. Regular plans involve a middleman like a broker or bank, who earns a commission from your investment. Direct plans cut out the middleman, so more of your money actually works for you. But direct plans need you to do your own research. Here's how to choose the right one.
Switching from a regular fund to its direct version can save you up to ₹1.5 lakh over 10 years on a ₹5,000 monthly SIP — that's roughly 150 months of your Netflix subscription!
Choosing a direct fund over a regular fund can put an extra 1% in returns back into your pocket every year — on a ₹10 lakh corpus, that's ₹10,000 more annually working for your future.
Key Takeaways
Compare the expense ratios of direct vs regular versions of the same fund on AMFI's website (amfiindia.com) — the difference is usually 0.5% to 1% per year, which compounds significantly over time.
If you are confident researching funds yourself, switch to direct plans via apps like MFCentral or your fund house's own website — but only after understanding the fund's category, risk level, and your own goals.
If you rely on a financial advisor or are new to investing, stay with regular funds for now — the guidance you get may be worth the small extra cost, especially to avoid costly mistakes.
If you invest in mutual funds — or are thinking about starting — you've probably seen two versions of the same fund: direct and regular. They invest in exactly the same stocks or bonds, managed by the same fund manager. The only real difference is cost and who sells it to you.
Regular funds are distributed through banks, brokers, or financial advisors. These intermediaries earn a commission, called a distributor fee, which is baked into the fund's expense ratio. Direct funds, introduced by SEBI in 2013, allow you to invest straight with the fund house — no middleman, no commission. This makes the expense ratio lower, which means your returns are slightly higher every single year.
The gap might sound small — typically 0.5% to 1% per year — but thanks to the power of compounding, it makes a big difference over time. A ₹5,000 monthly SIP in a regular fund growing at 12% annually could give you roughly ₹50 lakh in 20 years. The same SIP in the direct version, growing at 12.7%, could give you closer to ₹55 lakh. That's a ₹5 lakh difference — just from skipping the middleman.
But direct funds aren't for everyone. Without a distributor, you are entirely responsible for researching and selecting funds, rebalancing your portfolio, and staying disciplined during market downturns. If market jargon makes your head spin or you don't have the time to track your investments, a fee-based advisor or a trusted regular fund platform may actually save you money in the long run by preventing panic-driven mistakes.
Before switching, compare your current fund's expense ratio with its direct version on AMFI's website. If you are ready to go direct, platforms like MFCentral make it simple. And if you're juggling loans alongside your investments, GoCredit can help you find the right loan offers so your EMIs don't eat into your SIP budget. Pro tip: even in direct funds, set up an auto-SIP — consistency beats timing every single time.
Explore Smart Money Moves
Open GoCredit App →