Direct plan

Every mutual fund offers two versions of each scheme. A direct plan is the one you buy straight from the fund house, with no distributor in between, so no commission is paid. A regular plan includes that commission in its fee. Same scheme, same portfolio, same manager, lower yearly cost in the direct plan.

Why the cost gap matters

The difference is the commission built into the regular plan’s expense ratio, often a fraction of a percent up to around 1% a year. That sounds trivial, but it is charged every year on your whole balance and compounds against you, so over a decade or two the direct plan can leave meaningfully more in your hands for an identical investment. Because the fee comes out before the NAV is set, the direct plan simply shows a slightly higher NAV over time.

Direct versus regular, honestly

The direct plan is not “better” in every case; it is cheaper because it comes with no advice. The regular plan’s extra cost is what pays a distributor or adviser. So the sensible rule is this: if you choose and manage your funds yourself, the direct plan leaves more money with you. If you genuinely rely on an adviser who earns that commission, a regular plan can be worth it. What to avoid is holding a regular plan while getting no advice at all.

How to switch

You can buy direct plans through the fund house’s own site or app, or neutral platforms. Moving from regular to direct is a redemption and a fresh purchase, so mind any exit load and capital gains. See the same fund for a lower cost.