Mutual fund investment is growing rapidly in the country. Mutual funds involve market risk, but despite this, common investors of the country are investing in mutual funds in large numbers because mutual funds are giving tremendous returns to their investors. All schemes of mutual funds come with 2 different plans – direct plan and regular plan. There are many differences between these two plans of mutual fund scheme, which affect your investment. Here we will try to know the difference between regular plan and direct plan of mutual funds.
Mutual funds with regular plans are purchased from mutual fund distributors or agents
Mutual funds with regular plans are bought through a mutual fund distributor or agent. In regular plans, the fund house pays brokerage or distribution fees to the mutual fund distributor or agent as they sell these schemes to investors. These schemes have a higher expense ratio. A higher expense ratio impacts the overall returns of investors as the fund house passes on the fees paid to the distributor or agent to the investors.
There is no role of middlemen in mutual funds with direct plans
Direct plan mutual funds are bought directly from the fund house and there is no role of any middleman in it. Investors can buy direct plans by directly visiting the fund house’s website. Apart from this, investors can also buy direct plan mutual funds from SEBI registered investment advisors. Apart from this, now direct plan mutual funds can also be purchased from online brokerage platforms.
Some more differences between Regular and Direct Plans
Since regular plans are bought from a distributor or agent, investors do not have to manage or monitor their portfolio. Apart from this, distributors or agents are ready to help investors in case of any need. Whereas, in direct plans, investors have to take care of everything themselves.
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