Direct vs regular mutual fund plans
On direct vs regular mutual fund plans, the portfolio is the same and the manager is the same. The only difference is how you buy the scheme and what it costs. A direct plan is bought straight from the fund house, with no distributor in between, so its expense ratio leaves out any distributor commission. A regular plan is bought through a distributor or advisor whose trail commission is built into the expense ratio. SEBI has required every open-ended scheme to offer both options since January 1, 2013. Source: SEBI circular CIR/IMD/DF/21/2012.
Definition
Direct and regular plans
are two versions of the same mutual fund scheme, holding the same portfolio. A direct plan is bought from the fund house with no distributor, so it excludes a distributor commission. A regular plan is bought through a distributor whose trail commission is inside the expense ratio. Source: SEBI.
Direct vs regular mutual fund: what actually changes
Only the cost and the channel change. Everything about the underlying investment stays identical.
| Direct plan | Regular plan | |
|---|---|---|
| Portfolio | Same holdings | Same holdings |
| Fund manager | Same | Same |
| Bought through | The fund house directly | A distributor or advisor |
| Distributor commission | Not included | Included in the expense ratio |
| Expense ratio | Lower | Higher |
| NAV over time | Typically higher | Typically lower |
Why is the expense ratio lower on a direct plan?
Because a regular plan pays the distributor a trail commission out of the scheme's assets, and a direct plan does not.
Jan 1, 2013
Date SEBI made a direct plan mandatory for every open-ended scheme
Source: SEBI circular CIR/IMD/DF/21/2012
That commission is the whole of the gap. For equity funds it often runs between 0.30% and 1.25% a year, and the exact figure is disclosed on each scheme's factsheet. Because less is deducted from a direct plan, its NAV tends to sit higher than the regular plan of the same scheme over time, even though the two own exactly the same securities. Source: SEBI, AMFI.
Which disclosures show the difference?
Every scheme lists its direct-plan and regular-plan expense ratios side by side on the factsheet and website, and AMFI publishes scheme-level TER data. The holdings, disclosed in the monthly portfolio statement, are one and the same for both plans.
So on direct vs regular mutual fund plans, the takeaway is a cost distinction, not a verdict: same portfolio, different fee path. Flock reads the monthly portfolio disclosures to show what funds hold, dated and sourced. See how to find which mutual funds are buying a stock and the mutual fund portfolio tracker. What any of it means for your own decision is your call to make.
Frequently asked questions
What is the difference between a direct and a regular mutual fund plan?
Both plans invest in the same portfolio, managed by the same manager. A direct plan is bought straight from the fund house with no distributor, so its expense ratio excludes a distributor commission. A regular plan is bought through a distributor whose trail commission is built into the expense ratio. Source: SEBI.
When did SEBI introduce direct plans?
SEBI mandated direct plans from January 1, 2013, through a circular dated October 22, 2012. Every open-ended scheme has offered a direct option since then, at a lower expense ratio than its regular counterpart. Source: SEBI circular CIR/IMD/DF/21/2012.
How much lower is a direct plan's expense ratio?
The gap equals the distributor commission that a regular plan carries and a direct plan does not, often in the range of 0.30% to 1.25% a year for equity funds. The exact difference is disclosed on each scheme's factsheet. Source: SEBI, AMFI.
Is the NAV different for direct and regular plans?
Yes. Because a direct plan has a lower expense ratio, less is deducted from it, so its NAV is typically higher than the regular plan of the same scheme over time. The underlying holdings are identical. Source: SEBI.
Flock tracks these filings, sourced, dated, and linked back to the original. See what smart-money entities disclosed, without the guesswork about what it means.
Disclosures shown are public regulatory filings. Data may be delayed or incomplete. Smart-money entities may no longer hold positions shown. Not investment advice.