Since 2013, every mutual fund scheme in India offers two plans: a Direct Plan and a Regular Plan. Both invest in exactly the same portfolio and are managed by the same fund manager. The difference lies in how you invest and what it costs.
Direct plans
You invest directly with the AMC, through its website, office or a registered platform, without a distributor. Since no distributor commission is paid, the expense ratio is lower.
Regular plans
You invest through a mutual fund distributor, such as an AMFI registered distributor with an ARN. The AMC pays the distributor a commission, which is included in the scheme's expense ratio. As a result, the NAV of a regular plan is lower than that of the direct plan of the same scheme, and returns differ by roughly the difference in expense ratios.
What a distributor does
- Helps with KYC, forms and transaction processing.
- Shares scheme documents and information for your review.
- Handles service requests such as nominee updates, bank changes and redemptions.
- Provides statements and a consolidated view of your holdings.
Our disclosure
The Investments Hub is an AMFI registered mutual fund and SIF distributor and deals in regular plans. We receive commission from AMCs, and details are available on request and on our Commission Disclosure page. You are always free to invest in direct plans on your own.