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What is Direct Mutual Funds? What’s the difference between Direct and Regular Mutual Funds?Does Direct Fund is always good for Investment than Regular Funds? That’s one of most frequent question we have received recently. Here is everything you need to know.

In case you are new to Mutual Fund Investment world, check out this 

In this article:

  • What are Direct Mutual Funds?
  • Conflict of Interest (Confusion in the users’ mind: Direct vs Regular).
  • Cost of Investing in Direct Mutual Funds.
  • Direct Mutual Funds are not for you if…
  • Sqrrl is now direct because we’re on your side.


What are Direct Mutual Funds?

Starting Jan 1, 2013, after a SEBI purview every Mutual Fund in India comes in two plan– a ‘Regular Plan’ and ‘Direct Plan’. These are two exact same scheme and are run by the same fund managers. The mutual funds invest in the same stocks and bonds, but with one very crucial difference:

The Regular Plan Costs you more!

Under a Regular Mutual Fund Plan, the Asset Management Company (AMC) pays a small percentage of commission, every quarter. This is a small commission that is paid under the expense ratio of the fund and can range anywhere between 0.1-1% of your investment amount.

Under a Direct Mutual Fund Plan, there are no commissions paid to anyone. Instead, this difference of the commission paid to the broker (0.1-1%) will be added back to your investment in the mutual fund, resulting in a higher return on investment.


Difference Between Direct and Regular Mutual Funds: What, why & how?

If you’re reading this, chances are you are a beginner investor or have invested in a mutual fund without knowing the difference between direct & regular mutual funds. At these stages, we believe you have three very important questions in your mind.

  1. How do I know if I have a direct or regular plan?
  2. I was told in the long run commissions don’t matter and so there’s a nominal difference between regular and direct funds, is it true?
  3. How do I buy direct funds, or how do I switch my current investments into direct.

We’ll try and help you get answers to all of these questions in the simplest way possible. to read more feel free to read this step by step guide with examples and videos for 


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