Same fund, two plans
Every mutual fund scheme has a direct plan, bought straight from the fund house or a platform that doesn't take commission, and a regular plan, bought through a distributor. They hold exactly the same investments. The difference is the expense ratio (TER): the regular plan's is higher because it includes the distributor's commission, paid every year for as long as you stay invested.
Why a small difference adds up
The expense ratio is taken from the fund's value every day, so it reduces your return each year: your return ≈ the fund's return − its expense ratio. On a growing balance, a one-point gap compounds: ₹10 lakh invested for 20 years in a regular plan earning 10.5% instead of 11.5% ends up about 17% smaller.
Before you switch
- Moving from a regular to a direct plan is a sale and a new purchase, so it can mean capital gains tax and an exit load on recent units. Switching units that are past the exit-load period, and using the yearly ₹1.25 lakh equity exemption, keeps it cheaper.
- A distributor may be worth paying for advice you use. Know what you pay either way.
- Find both plans' expense ratios in the fund's factsheet or on the AMC's website; they change from time to time.
For education only. This isn't a recommendation to buy, sell or switch any fund; Welthr is not a SEBI-registered adviser.
Results are estimates for illustration only, not financial advice. Banks and schemes may round, apply TDS or use slightly different day counts — confirm figures with your bank or employer. Written by the Welthr team; last reviewed on .