Regular Plan vs Direct Plan in Mutual Funds – Complete Guide

When it comes to mutual fund investing, one of the most common questions investors ask is: What’s the difference between a regular plan vs direct plan?

Both options allow you to invest in the same mutual fund scheme, but the costs, returns, and benefits differ significantly. Understanding this difference is crucial for making informed investment decisions.

In this article, we’ll cover the return difference between direct and regular mutual fund, the advantages and disadvantages of each, and how to decide which plan works best for you.

difference between direct and regular mutual fund, the advantages and disadvantages of each, and how to decide which plan works best for you.

What is a Regular Mutual Fund?

A regular plan mutual fund is when you invest through a distributor, broker, or financial advisor. The fund house pays a commission to the distributor, which is included in the expense ratio.

Benefits of Regular Mutual Funds:

  1. Guidance and handholding by financial advisors.
  2. Suitable for first-time or busy investors.
  3. Assistance in portfolio selection and rebalancing.

Disadvantage of Regular Plan Mutual Fund:

  1. Higher expense ratio compared to direct plans.
  2. Lower returns due to commission costs.  

What is a Direct Mutual Fund?

A direct mutual fund allows investors to buy directly from the fund house without intermediaries. Since there are no commissions involved, the expense ratio is lower, resulting in higher returns.

Benefits of Direct Mutual Funds:

  1. Higher returns over the long term.
  2. Transparency and control over investments.
  3. Access to online platforms and SIP calculators.

Disadvantages of Direct Plan Mutual Fund:

  1. No guidance from financial advisors.
  2. Requires investors to research and manage their portfolio themselves. 


Direct Growth vs Regular Growth

Both direct and regular plans offer growth and dividend options. In direct growth vs regular growth, the difference lies in cost efficiency. Direct growth plans typically outperform regular growth plans due to lower expenses.

For example, using a direct vs regular mutual fund return calculator, you’ll find that over a 10–15 year horizon, the return difference between direct and regular mutual fund can be substantial 

Advantages of Direct Mutual Funds Over Regular Plans

  • Higher returns (1–1.5% annually more on average).
  • Lower expense ratios.
  • More control and flexibility for DIY investors.

Advantages of Regular Mutual Funds Over Direct Plans

  • Expert advice and professional guidance.
  • Convenience for beginners.
  • Helpful in managing portfolios for long-term goals.


How to Invest in Direct Mutual Funds?

  • Visit the fund house website (like TATA Ethical Fund, Taurus Ethical etc).
  • Make sure your documents are correct and without errors.
  • Make sure your Aadhar and PAN Card is linked.
  • Click here to checkout what all documents are required to Start investing in Mutual Funds.  
  • Complete KYC (Know Your Customer) process online.
  • Complete the mandate process and complete the linking process. 
  • Use a SIP calculator to plan monthly investments.
  • Choose between lump sum or SIP mode. 

How to Invest in Regular Mutual Funds?

  1. Approach a distributor, broker, or financial advisor.
  2. They help you choose funds based on your goals.
  3. Commissions are built into the plan expense ratio.

Regular Plan vs Direct Plan Mutual Fund – Example with TATA Ethical Fund

If you invest in TATA Ethical Fund, the underlying portfolio is the same for both plans. However:

  • Direct Plan: Lower expense ratio, higher long-term returns.
  • Regular Plan: Higher expense ratio, but guidance included.

You can also compare this with Taurus Ethical Fund for similar insights.

👉 Want to learn more about ethical investing? Read our blog on TATA Ethical Fund.
👉 Explore Taurus Ethical Fund for another Shariah-compliant option.
👉 Interested in learning the concepts behind ethical investing? Check our Islamic Finance Course in India. 

Final Thoughts

Choosing between a regular plan vs direct plan mutual fund depends on your financial knowledge and preferences. If you are comfortable managing investments, direct plans may be the right fit. But if you value professional advice and don’t mind paying slightly more, regular plans work well.

In the long run, understanding this distinction will help you maximize your wealth creation journey.


Frequently Asked Questions (FAQs) on Regular Plan vs Direct Plan

Q1: Which is better, direct or regular plan?
Direct plans generally offer higher returns because of lower expense ratios, while regular plans provide advisory support.

Q2: Can I convert a regular plan to a direct plan?
Yes, you can switch from a regular plan to a direct plan by submitting a request to your fund house.

Q3: What is the difference between HDFC direct and regular?
The fund portfolio remains the same. The difference lies in cost — HDFC direct plans are commission-free, whereas regular plans include distributor fees.

Q4: What is a direct plan?
A direct plan is a mutual fund investment option where you invest directly with the fund house without intermediaries, resulting in higher returns due to lower expenses.


Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory. Mutual fund and investment options are subject to market risks. Please consult a financial advisor before investing.