Markets are closed for weekend.

Create an Account

Its Free and always will be!

Sign up or login with your social accounts
Birthday
Day

Direct Mutual Fund vs Regular Mutual Fund

Let us talk about, Mutual Fund scheme has a Direct Plan and a Regular Plan.

An Direct Plan -- You can buy straight from the mutual fund companies typically from websites and normal Strategy You can buy through mediator like agent, adviser, distributor etc.. Commission is paid to the intermediary by business in Routine plans. If you invest in Mutual Funds through a broker or a distributor, then you are investing in Regular Plans. However, when you invest through the Mutual Fund straight or seek the aid of an advisor you invest in Direct Plans. All indirect Strategy of mutual fund schemes require the term"Direct" or"Direct Plan" to be clearly mentioned in the strategy name.

Mutual Fund Houses/AMCs (Asset Management Companies) -- You can Directly visit the Mutual Fund website of this finance. All you have to do would be to fill out an application form searching for your personal details, bank account details, KYC etc. and you'll be allotted the units upon payment. Through MFU(Mutual Fund Utilities)/CAMS (Computer Age Management Services) and SEBI registered investment consultants can simply recommend direct plans.

Regular plan you invest through a Distributor or advisor. AMCs usually pay some commission to agents for their services. Now, investors can avoid paying these commissions and it will Translate into more yields each year. The Direct Plan has a lesser Expense ratio as compared to existing Regular plans at the very same schemes plan. Investments under the Immediate Plan are open to all investors that Choose to spend without intermediary.

The direct plans of mutual funds generate higher returns as compared to regular plans. Depending on the expense ratio this difference in returns could be as high as 1.5% yearly. Due to the power of compounding this 1.5% could swell into a sizable amount over a long period of time.

Amount Return % p.a. Tenure Regular Plan Direct Plan Difference
Rs. 15000 8.00% 10 27,44,191 28,44,373 Rs. 1,00,182
Rs. 25000 8.00% 10 45,73,651 47,40,622 Rs. 1,66,971
Rs. 15000 12.00% 15 74,93,703 79,65,424 Rs. 4,71,721
Rs. 25000 12.00% 15 1,24,89,505 1,32,75,707 Rs. 7,86,202

 

  • If I invest a sum in HDFC 200 Regular and Direct:

After 1 year: If the regular fund has a value A, the direct fund will have value (approximately)

A x (1+0.5%)

After 3 years: If the regular fund has a value B, the direct fund will have a value (approximately)

B x (1+0.5%) x (1+0.5%) x (1+0.5%) and so on.

In the above example I have assumed 0.5% as a constant difference in expense ratios. If this difference is 0.5% in 1st year, 0.4% in 2nd  year and 0.6% in 3rd year then we will have:

B x (1+0.5%) x (1+0.4%) x (1+0.6%)

So if you disciple to stay invested for a long period of time a ‘good’ fund then can be a significant difference in corpus.

Direct plans definitely have more benefits than regular plans. Portfolio will be the same for both Plans. Investment Objective, Investment Strategy, Exit Load, risk factors, facilities offered and other terms and conditions will continue to be same.

It is obviously better to invest in direct plans for higher returns, but this also requires more hard work from the investor as he has to do the paperwork and choose a suitable fund.

Do not fear, we have a Online Platform where you can compare and invest in direct mutual fund without paying commission you can save upto 28 lacs in 25 yrs. comprehensive automated advisory that is based on a scientific algorithm and will recommend you to invest in best schemes to fulfill your goals. We providing you all the information you ever need.

Always look for or ask for the word “Direct” or “Direct Plan” to be clearly mentioned in the scheme name in your portfolio statement.

Read Complete Article Difference Between Direct Mutual Fund and Regular Mutual Fund and know how to save 25 lacs in 25 yr just to switch 

Zerodha Coin - Direct Mutual Fund Platform

Thanks

Gunjan Chokshi

Certified Financial Advisor

SEBI Register Investment Advisor

Let us talk about, Mutual Fund scheme has a Direct Plan and a Regular Plan.

An Direct Plan -- You can buy straight from the mutual fund companies typically from websites and normal Strategy You can buy through mediator like agent, adviser, distributor etc.. Commission is paid to the intermediary by business in Routine plans. If you invest in Mutual Funds through a broker or a distributor, then you are investing in Regular Plans. However, when you invest through the Mutual Fund straight or seek the aid of an advisor you invest in Direct Plans. All indirect Strategy of mutual fund schemes require the term"Direct" or"Direct Plan" to be clearly mentioned in the strategy name.

Mutual Fund Houses/AMCs (Asset Management Companies) -- You can Directly visit the Mutual Fund website of this finance. All you have to do would be to fill out an application form searching for your personal details, bank account details, KYC etc. and you'll be allotted the units upon payment. Through MFU(Mutual Fund Utilities)/CAMS (Computer Age Management Services) and SEBI registered investment consultants can simply recommend direct plans.

Regular plan you invest through a Distributor or advisor. AMCs usually pay some commission to agents for their services. Now, investors can avoid paying these commissions and it will Translate into more yields each year. The Direct Plan has a lesser Expense ratio as compared to existing Regular plans at the very same schemes plan. Investments under the Immediate Plan are open to all investors that Choose to spend without intermediary.

The direct plans of mutual funds generate higher returns as compared to regular plans. Depending on the expense ratio this difference in returns could be as high as 1.5% yearly. Due to the power of compounding this 1.5% could swell into a sizable amount over a long period of time.

Amount Return % p.a. Tenure Regular Plan Direct Plan Difference
Rs. 15000 8.00% 10 27,44,191 28,44,373 Rs. 1,00,182
Rs. 25000 8.00% 10 45,73,651 47,40,622 Rs. 1,66,971
Rs. 15000 12.00% 15 74,93,703 79,65,424 Rs. 4,71,721
Rs. 25000 12.00% 15 1,24,89,505 1,32,75,707 Rs. 7,86,202

 

If I invest a sum in HDFC 200 Regular and Direct:

After 1 year: If the regular fund has a value A, the direct fund will have value (approximately)

A x (1+0.5%)

After 3 years: If the regular fund has a value B, the direct fund will have a value (approximately)

B x (1+0.5%) x (1+0.5%) x (1+0.5%) and so on.

In the above example I have assumed 0.5% as a constant difference in expense ratios. If this difference is 0.5% in 1st year, 0.4% in 2nd  year and 0.6% in 3rd year then we will have:

B x (1+0.5%) x (1+0.4%) x (1+0.6%)

So if you disciple to stay invested for a long period of time a ‘good’ fund then can be a significant difference in corpus.

Direct plans definitely have more benefits than regular plans. Portfolio will be the same for both Plans. Investment Objective, Investment Strategy, Exit Load, risk factors, facilities offered and other terms and conditions will continue to be same.

It is obviously better to invest in direct plans for higher returns, but this also requires more hard work from the investor as he has to do the paperwork and choose a suitable fund.

Do not fear, we have a Online Platform where you can compare and invest in direct mutual fund without paying commission you can save upto 28 lacs in 25 yrs. comprehensive automated advisory that is based on a scientific algorithm and will recommend you to invest in best schemes to fulfill your goals. We providing you all the information you ever need.

Always look for or ask for the word “Direct” or “Direct Plan” to be clearly mentioned in the scheme name in your portfolio statement.

Read Complete Article Difference Between Direct Mutual Fund and Regular Mutual Fund and know how to save 25 lacs in 25 yr just to switch 

Zerodha Coin - Direct Mutual Fund Platform

Thanks

Gunjan Chokshi

Certified Financial Advisor

SEBI Register Investment Advisor

Rate this blog entry:
WD Gann's Mysterious World
Reliance Retirement Fund – Pension Product in a Ne...
 

Comments 1

shobhit mehrotra on Tuesday, 25 September 2018 17:51

sir can you please tell me how to select which mutual fund is best and what category of it can generate good returns safely.......

sir can you please tell me how to select which mutual fund is best and what category of it can generate good returns safely.......
Already Registered? Login Here
Guest
Sunday, 24 March 2019

Captcha Image

Popular Investing Books

William O Neil
Michael W. Covel
Burton G Malkiel
Mel Lindauer
T. Sullivan Brown
Daniel R. Solin

Search Blogs

Most Popular Authors

Top 100 Investment Blogs

Reduce your Brokerage by 100%!!

Be a Smart & Well Informed Investor!
Join Today its Free.
Register or Login with just one Click using your Social Account