When you buy a mutual fund through Groww, Zerodha Coin, or directly from an AMC website, you get the direct plan. When you buy through a bank relationship manager, a traditional broker, or a financial advisor who earns commission — you get the regular plan.

Same fund. Same fund manager. Same portfolio. Just a different fee structure. And over 15-20 years, that difference in fee structure can cost you ₹15 lakh to ₹30 lakh on a modest SIP. No exaggeration.

What Is the Actual Difference?

Every mutual fund has an expense ratio — the annual fee charged as a percentage of your investment for managing the fund. In India, SEBI caps this for equity funds at around 1.05% to 2.25% depending on fund size.

The difference between direct and regular plans is the distributor commission embedded in the regular plan expense ratio. This commission — typically 0.5% to 1.5% per year — goes to whoever sold you the fund.

Here is a real example. Mirae Asset Large Cap Fund as of mid-2026:

  • Regular plan expense ratio: ~1.52%
  • Direct plan expense ratio: ~0.53%
  • Difference: ~0.99% per year

One percent does not sound like much. But let the math do the talking.

The Real Numbers Over 10 and 20 Years

Let us say you invest ₹10,000 per month via SIP for 20 years. Assume a gross return of 13% per year (reasonable for a diversified equity fund over the long term).

  • Regular plan (13% − 1.5% = 11.5% net): Corpus after 20 years ≈ ₹89 lakh
  • Direct plan (13% − 0.5% = 12.5% net): Corpus after 20 years ≈ ₹1.07 crore

Difference: ₹18 lakh. For a ₹10,000/month SIP. Over 20 years, you invested ₹24 lakh total. That ₹18 lakh gap is essentially three-fourths of your total investment gone to distributor commissions.

Run the same for ₹20,000/month, and the gap crosses ₹35 lakh.

Honestly, this is one of the most important financial decisions Indian investors overlook. Not because they are careless — but because no one tells them about it. The bank RM certainly will not.

Why Do Regular Plans Still Exist?

Distributor-Driven Sales

Banks and traditional distributors earn their income from regular plan commissions. HDFC Bank relationship manager, the LIC agent turned mutual fund advisor, the neighbourhood broker — they all earn from regular plan trails. It is a conflict of interest baked into the model.

SEBI introduced the direct plan in January 2013 specifically to address this. But old habits die hard, and many investors — especially in Tier 2 and Tier 3 cities — still rely on intermediaries they trust.

Convenience and Hand-Holding

Regular plans do offer something: a human being who answers calls, reminds you to stay invested during crashes, and helps with paperwork. For first-time investors who need that emotional anchoring, this has some value. But ₹18 lakh over 20 years is a steep price to pay for it.

Lack of Awareness

Most investors simply do not know. The two plans have identical names — just Direct and Regular appended. Many people invested in regular plans for years without realising the direct option existed.

Where to Buy Direct Plans

  • Zerodha Coin: Direct plans for all major AMCs. Clean interface, no additional platform fee on most funds.
  • Groww: Easy to use. Offers direct plans. Suitable for beginners.
  • Kuvera: 100% direct plans, no commissions, goal-based investing tools. One of the cleanest platforms for direct mutual funds in India.
  • MFCentral / AMC websites: You can invest directly on each AMC website for a fully direct experience with no intermediary.

Should You Switch From Regular to Direct?

If you currently hold regular plans, switching is possible but has a tax angle you must consider.

Switching from regular to direct within the same fund is treated as a redemption and fresh purchase by the tax rules. That means short-term capital gains at 20% if held less than 1 year, and long-term capital gains at 12.5% above ₹1.25 lakh per year if held more than 1 year.

Our view: if your holding is over 1 year and the gains are modest, switch. The future savings in expense ratio will far outweigh the one-time LTCG tax. Do not let the tax tail wag the investment dog.

One More Thing About Expense Ratios

Even within direct plans, expense ratios vary. A direct plan of an index fund like UTI Nifty 50 Index Fund charges around 0.18-0.20% per year. An active large-cap direct plan charges 0.5-0.8%.

If the active fund manager cannot beat the index after fees consistently — and most cannot over 10+ years — an index fund in direct plan form is hard to beat for the core of your portfolio.

Frequently Asked Questions

Is the NAV of direct plans always higher than regular plans?

Yes. Since direct plans have lower expenses, more money compounds for you. Two funds launched simultaneously will diverge in NAV by 15-25% over 15 years purely due to the expense ratio difference.

Can I hold both direct and regular plans of the same fund?

Technically yes — they are treated as separate folios. But there is no reason to. Switch to direct as soon as tax implications are manageable.

How do I check if my current investment is direct or regular?

Check your account statement from CAMS or KFintech. The fund name will clearly say Direct or Regular. If it says neither, it is almost certainly a regular plan.

Does SEBI regulate the maximum commission distributors can earn?

Yes. SEBI has capped distributor trail commissions. But within the cap, distributors can still earn 0.5-1.5% annually — which is the gap you pay in regular vs direct plans.