Direct Plan vs Regular Plan: what’s the actual difference?
Direct and Regular plans of the same scheme hold the identical portfolio. Regular plans carry a distributor commission built into the expense ratio, so their NAV is slightly lower over time.
Every SIF scheme (like every mutual fund scheme) is typically offered in two plans:
- Direct Plan: purchased directly from the AMC, with no distributor/advisor commission embedded in the expense ratio.
- Regular Plan: purchased through a distributor or advisor, who earns a trail commission that is built into the scheme's expense ratio.
Both plans invest in the exact same underlying portfolio and follow the identical strategy. Because the Regular Plan's expense ratio is higher (to pay the distributor), its NAV will typically be slightly lower than the Direct Plan's NAV for the same scheme over time, even though both started at the same launch NAV.
FAQs
No — risk is identical, since both plans hold the same portfolio. The only difference is the expense ratio (and therefore net returns), driven by distributor commission.
Generally yes, though it may be treated as a redemption-and-reinvestment for tax purposes. Check the scheme’s exit load and consult a tax advisor before switching.
This article is general educational information, not investment or tax advice. Please consult a
SEBI-registered adviser before making investment decisions.