What is Direct vs Regular Plan?
Direct plans have no distributor commission; regular plans route through ARN holders who earn trail.
Understanding Direct vs Regular Plan
Every mutual fund scheme in India offers two variants: a Direct plan (no distributor involved) and a Regular plan (sold through an ARN-registered distributor). The key difference is the expense ratio — Regular plans have a higher TER because they include the distributor's trail commission.
The NAV of a Direct plan is always higher than the Regular plan for the same scheme, because Regular plan NAV absorbs the distributor commission. Over a long investment period, this difference compounds significantly.
For distributors, this distinction is fundamental — their income (trail commission) comes from the Regular plan. For investors, the right choice depends on whether they value independent advice and service from a distributor, or prefer to manage their own investments.
“For Indian IFAs, a clear understanding of direct vs regular planis essential to managing a compliant and profitable advisory practice.”
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