Regular vs Direct MF: Are You Losing 1.5% Yearly?
When you buy a mutual fund through a broker or distributor, you pay a higher expense ratio than buying directly. The difference can quietly eat lakhs from your retirement corpus over time. Here's what you need to know.
That 1.5% gap on ₹5L SIP over 20 years equals roughly ₹8–10 lakh — enough for a small car down payment.
Your returns shrink by this much every year in a regular mutual fund plan
Key Takeaways
Check your current mutual fund statements on MF Central (mfcentral.com) and note whether your holdings are under 'Regular' or 'Direct' plan — the plan type is printed on every CAS statement.
Compare the expense ratios of your regular plan vs its direct equivalent on the AMC's website or on Value Research Online — if the gap exceeds 0.75%, calculate the 10-year cost using a SIP calculator.
If you genuinely need guidance, hire a SEBI-registered investment adviser (RIA) who charges a flat fee — you get professional advice AND direct plan returns, instead of paying a hidden distributor commission forever.
When you buy a mutual fund through a broker or distributor, you pay a higher expense ratio than buying directly. The difference can quietly eat lakhs from your retirement corpus over time. Here's what you need to know.
Here's what happened: New fund houses entering India launch both regular and direct mutual fund plans — regular plans pay a commission to distributors, which raises the fund's annual expense ratio for investors.. The expense ratio difference between regular and direct plans of the same fund typically ranges from 0.5% to 1.5% per year, compounding into a significant corpus gap over 10–20 years.. SEBI rules require all AMCs to offer direct plans alongside regular plans, giving every Indian investor the legal right to skip the distributor and invest at lower cost..
What you should do: Check your current mutual fund statements on MF Central (mfcentral.com) and note whether your holdings are under 'Regular' or 'Direct' plan — the plan type is printed on every CAS statement.. Compare the expense ratios of your regular plan vs its direct equivalent on the AMC's website or on Value Research Online — if the gap exceeds 0.75%, calculate the 10-year cost using a SIP calculator.. If you genuinely need guidance, hire a SEBI-registered investment adviser (RIA) who charges a flat fee — you get professional advice AND direct plan returns, instead of paying a hidden distributor commission forever..
Switching from a regular to direct plan within the same fund house is treated as a redemption and fresh purchase — it may trigger capital gains tax. Time the switch at your financial year-end to minimise the tax impact.
For readers weighing their credit and loan options, our personal loan guide and CIBIL score resources put this update in context.
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This article is reported by GoCredit's Editorial Team based on the source above. GoCredit synthesises, contextualises, and adds India-borrower-relevant analysis. We are not the original publisher.