Direct Vs. Regular Mutual Funds: What’s The Difference?
5paisa Research Team
Last Updated: 08 Aug, 2024 04:59 PM IST
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Content
- Introduction
- What are Direct Mutual Funds?
- What are Regular Mutual Funds?
- Difference Between Direct and Regular Mutual Funds
- What are the Advantages of Regular Plan over Direct plan in Mutual Funds?
- Which is Better: Direct or Regular Mutual Fund?
- Conclusion
Introduction
Mutual funds are a valuable tool to grow your capital wisely. But which mutual fund scheme is the best suited for you to invest effectively? Even though many similar traits make it hard to pick one, there are few prominent differences between the schemes. Unearth the facts about direct and regular mutual funds and make a well-informed decision.
Mutual funds are slowly becoming a go-to investment option for salaried employees and self-employed individuals these days. Mutual funds can help you earn much more money than other traditional favourites such as fixed deposits. Mutual fund performance has been remarkable in recent years because of the availability of tax savings. Plus, mutual funds are now giving more returns with liquidity. So, if you are one of those who have made up their mind to invest in a mutual fund, you have two ways to invest. But before we jump into that topic, let’s know more about mutual funds and how beneficial they can be for you.
More About Mutual Funds
- What is SIF (Specialised Investment Fund)?
- What Are Liquidity ETFs?
- Why Invest in ETFs Through SIPs?
- Difference Between ETFs and Stocks
- What is Gold ETF?
- Can We Pledge on Mutual Funds?
- Risks in Mutual Funds Investments
- Know How to Transfer Mutual Funds
- NPS vs ELSS
- XIRR vs CAGR: Understanding Investment Return Metrics
- SWP and Dividend Plan
- What is Solution Oriented Mutual Funds?
- Growth Vs Dividend Reinvestment Option
- Annual vs Trailing vs Rolling Returns
- How to Get Capital Gain Statement for Mutual Funds
- Mutual Funds Vs Real Estate
- Mutual Funds vs. Hedge Funds
- Target Maturity Funds
- How to Check Mutual Fund Status with Folio Number
- Oldest Mutual Funds In India
- History Of Mutual Funds In India
- How To Redeem ELSS Before 3 Years?
- Types of Index Funds
- Who Regulates Mutual Funds In India?
- Mutual Fund Vs. Share Market
- Absolute Return in Mutual Fund
- ELSS Lock in Period
- Treasury Bills Repurchase (TREPS)
- Target Date Fund
- Stock SIP vs Mutual Fund SIP
- ULIP vs ELSS
- Long Term Capital Gain Tax on Mutual Funds
- Smart Beta Funds
- Inverted Yield Curve
- Risk-Return Trade-Off
- Registrar and Transfer Agents (RTA)
- Mutual Funds Overlap
- Mutual Fund Redemption
- Mark to Market (MTM)
- Information Ratio
- Difference Between ETF and Index Fund
- Difference Between Mutual Fund and Index Fund
- Top 10 High Return Mutual Funds
- Passive Mutual Funds
- Passive Funds vs Active Funds
- Consolidated Account Statement
- Mutual Funds Minimum Investment
- What is Open Ended Mutual Fund?
- What is Closed End Mutual Fund?
- Real-Estate Mutual Funds
- How to Stop SIP?
- How to Invest in SIP
- What is a Blue Chip Fund?
- What is XIRR in Mutual Funds?
- What is a Hedge Fund?
- Tax Treatment of Long Term Capital Gains
- What is SIP?
- NAV in Mutual Funds
- Advantages of Mutual Funds
- Stocks vs Mutual Funds
- What is STP in Mutual Fund
- How Mutual Fund Works?
- What is Mutual Fund NAV?
- What are Mutual Funds?
- Mutual Fund Cut Off Time
- Mutual Fund the Best Investment Option for Conservative Investors
- Advantages and Disadvantages of Mutual Funds
- How to Choose Mutual Funds in India?
- How to Invest In Mutual Funds?
- How to Calculate NAV of Mutual Fund?
- What Is CAGR In Mutual Funds?
- AUM in Mutual Fund
- Total Expense Ratio
- What is XIRR in Mutual Funds?
- What is SWP in Mutual Fund
- How to Calculate Mutual Fund Return?
- Gold Mutual Funds
- Tax On Mutual Fund Investment
- The Top Benefits and Drawbacks of The Rupee Cost Averaging Approach
- How to Start a SIP Investment?
- What Is SIP & How does SIP Work?
- Best SIP Plans for Long Term: How and Where to Invest
- Best SIP Mutual Fund Plans
- ELSS Vs SIP
- Top Fund Managers in India
- What is NFO?
- Difference Between ETF and Mutual Fund
- ULIPs VS Mutual Funds
- Direct Vs. Regular Mutual Funds: What’s The Difference?
- ELSS vs Equity Mutual Fund
- NPS vs Mutual Fund
- Can NRIs Invest in Mutual Funds?
- Mutual Funds Categorisation In India
- Everything You Need to Know About Small-Cap Funds
- What is Public Provident Fund ?
- What is Large Cap Mutual Fund ?
- What is Index Fund ?
- What is IDCW in Mutual Fund ?
- What is Hybrid Fund?
- What is Gilt Fund ?
- What is ELSS Fund ?
- What is Debt Funds?
- What is an Asset Management Company - A Thorough Explanation
- What are Mid Cap Funds
- Liquid Funds - What are Liquid Funds?
- A Beginner's Guide to Investing in Fund of Funds Read More
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. For detailed disclaimer please Click here.
Frequently Asked Questions
The yearly fee that mutual fund institutions charge investors for managing the scheme is known as the expense ratio of a mutual fund scheme. The precise amount is computed by dividing the mutual fund scheme's total expenditure by the asset value. Regular plans are more expensive than direct plans because of the difference in expense ratio. This is because the investor pays the agent commission, which ranges from 0.5% to 1.5% in standard plans. These fees are not relevant to direct plans since they lack agents or consultants.
Yes you can but remember for taxes purposes, switching from a regular plan to a direct plan will be treated as both a new investment in the new (direct) scheme and a redemption from the previous (regular) plan. Therefore, repurchasing units from a standard mutual fund scheme will result in capital gains tax.
Direct funds may be your best option if you are a sophisticated investor with a great interest in finance. Thus, many people only use outside brokers to invest in mutual funds out of convenience.
Any direct mutual fund will always have larger returns than the identical mutual fund's regular form. The "expense ratio" is the primary cause of this.