Regular vs Direct MF: Are You Overpaying 1.5%?

Millions of Indian investors are in 'regular' mutual fund plans that pay a commission to distributors — making your returns lower every year. Switching to 'direct' plans can save you lakhs over time with zero extra effort.

Here's what happened: Regular mutual fund plans include a distributor commission (expense ratio up to 2.5%) that quietly eats into your annual returns.. Direct plans cut out the middleman entirely — same fund, same fund manager, but a lower expense ratio by roughly 0.5% to 1.5%.. Over a 20-year SIP horizon, the compounding difference between regular and direct plans can add up to several lakhs on a modest investment..

What you should do: Log in to your MF portfolio on CAMS or KFintech and check if your holdings say 'Regular' or 'Direct' in the plan name.. Switch to the direct plan of the same fund via your AMC's website or apps like MF Central — no exit load if you have held over 1 year in most equity funds.. Compare expense ratios on AMFI's website (amfiindia.com) before choosing any new SIP — always pick the direct plan unless you genuinely need advisor guidance..

Switching from regular to direct is not a redemption — it is treated as a new purchase for tax purposes, so time your switch to minimise capital gains tax liability.