Two prices for one fund
Every Indian mutual fund is sold in two versions. Direct is what you get buying from the fund house itself. Regular is what you get buying through a distributor, a bank relationship manager, or an app that earns commission.
Nothing about the portfolio changes. Same manager, same stocks, same strategy, same mandate. The only difference is the expense ratio — the annual fee skimmed from the fund before your return is calculated. SEBI made the split mandatory in 2013 precisely so the commission would be visible rather than buried.
What the gap costs, in rupees
Suppose a fund returns 12% a year before fees. You put in ₹1 lakh and leave it alone.
| Years | Direct (11.5% net) | Regular (10.5% net) | What the gap cost |
|---|---|---|---|
| 5 | ₹1,72,000 | ₹1,65,000 | ₹7,000 |
| 10 | ₹2,97,000 | ₹2,71,000 | ₹26,000 |
| 20 | ₹8,82,000 | ₹7,37,000 | ₹1,45,000 |
Illustrative arithmetic on a 1% annual difference, not a forecast. Actual expense ratios vary by fund and change over time.
The number to notice is the last row. A one-percent difference does not stay one percent — it compounds against you, every year, on a base that is itself growing. After twenty years it has quietly taken about 16% of what you would otherwise have had.
Why anyone buys Regular at all
Usually because nobody told them there was a choice. The commission is invisible: it never appears as a line item on a statement, it is simply deducted before the NAV is published. You do not feel it the way you feel a brokerage charge.
There is one honest case for Regular. If a distributor genuinely stops you panic-selling in a crash, rebalances you when you would not have bothered, and keeps you invested for twenty years instead of three, they may well earn their fee several times over. Behaviour costs most investors far more than fees do. The question worth asking is simply whether you are getting that service — or just paying for it.
How to check any fund yourself
Open the fund's page on this site. Where both plans exist we show the Direct and Regular NAVs side by side, and the gap between them — which, for two plans launched together, is the accumulated commission. It is the clearest illustration available of what the Regular plan has actually cost the people holding it.
Two things to look for on the factsheet: the plan name must contain the word "Direct", and the expense ratio should be the lower of the two figures shown. If you already hold a Regular plan, switching to Direct is a redemption and a fresh purchase — so check the exit load and the capital-gains implication before you move.
What to take away
- Direct and Regular are the same fund at two prices.
- The gap is roughly 0.6–1.2% a year on equity funds, less on debt.
- It compounds, so the damage grows with your holding period.
- Regular is defensible if you are genuinely being advised. It is not if you are not.