All Mutual Funds have two plans- Regular plans and Direct plans. Regular plans have higher expense ratios as you invest through distributors, brokers or agents. On the other hand, Direct plans have lower expense ratios because you invest directly with the Mutual Funds. This means that Direct plans will always give you higher returns. Here are the returns of several Mutual Funds:
| Name of the fund | Direct plan (5 year return in %) | Regular Plan (5 year return in %) |
| Aditya Birla Sun Life Equity Fund | 24.34 | 23.14 |
| Kotak Standard Multicap Fund | 22.19 | 20.97 |
| Axis Focused 25 | 21.35 | 19.93 |
| Tata Retirement Savings Fund | 21.49 | 19.75 |
| ICICI Prudential Multicap Fund | 20.82 | 19.74 |
Source: Value Research, 19th September, 2018
Example: If you had Invested INR 1,00,000 in 2013 in Aditya Birla Sun Life Equity Fund, this is what it would have been valued today:
You would have earned INR 19,063 more or 6% higher returns over 5 years with Direct plan.
How to invest in Direct plans?
You can invest in Direct plans online through:
- Mutual Fund company websites
- MF Utility: https://www.mfuindia.com/
- CAMS/Karvy: https://www.camsonline.com/
What are the requirements to invest in Direct Mutual Funds?
- PAN Card
- Aadhar Card
- Bank Account
- Completed your KYC (If you have not completed your KYC refer this article and complete it)
Note: You do not need a Demat account to invest in Direct plans
Hence we can conclude that if you need a financial advisor for your investments, you should opt for the Regular plan else Direct plans are a better investment option.
