Direct Vs Regular Mutual Fund – Which is Better?

When we talk about mutual funds, the most important decision an investor faces are whether to choose Direct or Regular plan. They might seem similar, after all they both invest in the same underlying mutual fund schemes. But dig a little deeper, then you can find their key differences, that can significantly impact your long-term returns.  

Choosing between Direct and Regular Mutual Funds depends on various factors like your financial literacy, amount of time, and if you prefer professional guidance or want to take charge of your own investment decisions. This blog will break down all the differences between Direct and Regular Mutual Funds and help you make informed choices that align with your financial goals.  

Difference Between Direct and Regular Mutual Funds

Factors	Direct Mutual Fund	Regular Mutual Fund
Mode of Investment	Investors can invest directly with the mutual fund house through their website or app	These are bought through intermediaries like brokers or financial advisors
Expense Ratio	Lower expense ratio because there is no need to pay intermediary commission	Higher expense ratio because AMC pays commission to distributors
Returns	They usually offer 1% to 1.5% higher returns than their regular counterparts over the long term	Slightly reduced returns due to the cost of commissions
Net Asset Value (NAV)	Higher because the fewer expenses only deducted	Comparatively lower due to the embedded commission costs
Guidance and Support	It is suitable for DIY investors who are confident about choosing the right schemes	Ideal for beginners or those who prefer professional advice to make informed choices
Transparency	You can control your investments and get a clear picture of the cost structure	They do not always disclose the commissions being paid, making them less transparent
Access to Services	Offering value-added services like goal-based planning, tax-saving suggestions, and periodic portfolio reviews	You may need to do all this on your own or pay a fee to the advisor separately

Conclusion

If you are choosing between direct vs regular mutual fund, the decision of yours depends on your investment knowledge, time availability and willingness to manage your portfolio. Direct mutual fund plans are cost-effective and suitable for experienced investors. On the other hand, regular mutual fund plans offer guidance and are ideal for new investors or those who are seeking expert support.  

Both plans have their own merits, but you have to understand the key differences between regular and direct mutual fund schemes that will lead to making informed and confident decisions. Make informed decisions like a pro by choosing Navia Markets!

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