Direct Plans have lower expense ratios (and higher returns) because they exclude distributor commissions, unlike Regular Plans sold through intermediaries.
Every mutual fund scheme in India has two variants: a Direct Plan (purchased directly from the fund house or SEBI-registered platforms) and a Regular Plan (sold through distributors or banks). Both invest in an identical portfolio managed by the same fund manager. The only difference is cost — Regular Plans include a distributor commission that is absent in Direct Plans.
Same fund, same manager, same portfolio — but Direct Plan charges less every year. Less cost means higher NAV over time. A 1% annual difference in expense ratio can translate to 12–15% more corpus over 10 years, purely from cost savings.
SEBI mandated separate Direct Plan options from January 2013. All fund houses offer both variants.
Direct Plans carry a higher NAV than Regular Plans for the same scheme (fewer costs are deducted daily).
Invest via the fund house website, MF Central, MFU, or SEBI-registered direct-plan platforms.
No distributor is involved in Direct Plans; the investor self-selects and manages the portfolio.
Monthly SIP: ₹10,000 | Assumed gross return: 14% Direct Plan (TER 0.15%, net 13.85%): Corpus after 10 years → ₹26.1 lakh Regular Plan (TER 1.5%, net 12.5%): Corpus after 10 years → ₹22.9 lakh Difference: ₹3.2 lakh — purely from plan type, not fund selection.