Regular vs Direct MF: 1.5% Gap That Costs You

Regular mutual funds pay a commission to your broker or distributor from your own returns. Direct plans cut out the middleman — same fund, same manager, but lower fees and higher returns compounding in your pocket over time.

Here's what happened: Regular mutual fund plans carry an expense ratio that is typically 0.5% to 1.5% higher than direct plans because they include distributor commissions.. Over a 20-year SIP of ₹10,000 per month, the difference in corpus between regular and direct plans can exceed ₹10–15 lakh due to compounding.. Direct plans are available on AMC websites, MF Central, and SEBI-registered platforms like Groww, Zerodha Coin, and Paytm Money — no broker needed..

What you should do: Check your current mutual fund scheme name on your statement — if it says 'Regular', you are paying a distributor commission every year.. Compare your fund's direct vs regular expense ratio on AMFI's website (amfiindia.com) to see exactly how much you are losing annually.. Switch to the direct plan via your AMC's website or a direct-plan platform — note that switching may trigger capital gains tax, so calculate first..

Switching from regular to direct is treated as a redemption and fresh purchase — if your fund has short-term gains, wait until the 1-year or 3-year mark to avoid a surprise tax bill.