Difference between Direct & Regular Plan Mutual Funds
“One of the only ways to get out of a tight box is to invest your way out.”
A Mutual Fund is divided into two categories:
- Direct Plan Mutual Funds
- Regular Plan Mutual Funds
And in this topic, we will dive deeper into these two broad categories to understand how they work and who should invest in them.
Direct Plan Mutual Funds
The Securities And Exchange Board Of India (SEBI) introduced Direct Plan Mutual Funds in January 2013 making is compulsory for all the Asset Management Companies (AMCs) to provide an option to invest in Mutual Fund scheme directly. When an investor invests in a Mutual Fund directly with an Asset Management company(AMC) without the help of any broker, distributor, banker or any kind of intermediary, that is known as Direct Plan Mutual Fund. One can apply to Direct Plan Mutual Fund just by visiting the Mutual Fund house or visiting the company’s official website or through an online app such as Finity that provides the option on investing online.
Regular Plan Mutual funds
When you buy a Mutual Fund from broker, agents and other intermediaries, it is called a Regular Plan. Where the fund house pays commission to the intermediaries for making investors invest in the plan. That is the reason Regular Plan Mutual Funds are more expensive than Direct Plan Mutual funds. Regular Plans come with expert advice, and because of that, the expense ratio is higher than the Direct Plan Mutual Funds. In Regular Plan Mutual Fund sales, the commission is paid to the intermediaries, the amount of commission varies between 1-1.25 percent every year.
|Particulars||Direct Plans||Regular Plans|
|Returns||More (no fees or commission)||Less than Direct Plans|
|Expense Ratio||Low||Commission to intermediaries|
Wondering how to shift from Regular Plans to Direct Plans?
If you have invested in Regular Plans (with commission) in the past, where you can switch to Direct Plans with (0% commission) the Insta Switch option on Finity app which enables you to switch from Regular to Direct Plan where the entire process is paperless which you can complete in 2 minutes.
- Login into Finity app. Then click on “InstaSwitch” option.
- Our app walks you through the entire InstaSwitch process.
- Enter PAN (Permanent Account Number) & email address
- Check your email inbox for Consolidated Account Statement (CAS) on your email based on your PAN (Permanent Account Number). Forward the email to email@example.com
- After some time, you will receive an intimation from us so that you can track & transact in your portfolio through the Finity app.
Direct Plan Mutual Funds are best known as it suits your investment horizon. To get access to these funds, you can invest in Finity, India’s most trusted app for Direct Plan Mutual Funds.
I hope these details help you on your journey with Finity.