How-to direct plan regular plan TER

How to decide between direct plan and regular plan (mutual fund)

From WebNotes, a public knowledge base. Last updated 19 May 2026. Reading time ~5 min.

Key facts

TER advantage of direct	0.5-1.5 percentage points lower per year
20-year impact	10-20% extra corpus on equity, all else equal
Direct accessible via	AMC portals, MFU, MF Central, Coin, Groww, Kuvera, ET Money, INDmoney
When regular justifies	Genuine financial planning + behavioural coaching from RIA

Procedure

Understand the TER differenceRegular plans have a higher Total Expense Ratio (TER) than direct plans because the regular plan pays distributor commission (typically 0.5-1.5 percentage points). Direct plans have no distributor commission; the saving is the investor’s.
Compute the long-term costOn a 20-year SIP at Rs 10,000/month at 12% gross return, the TER drag of 1 percentage point reduces the corpus by ~15-20%. Over decades, the compounding gap is material.
Check what your distributor offersIf you use a distributor (bank branch, IFA, broker-as-distributor), they earn the trail commission paid by regular plans. They have no incentive to recommend direct (no commission).
Assess whether you need advisoryDirect plans assume you do your own research. If you need genuine financial planning (goal setting, asset allocation, behavioural coaching), a SEBI-registered RIA (Registered Investment Adviser) charges separately and recommends direct plans. RIAs are the proper advisory route.
Pick the routeDIY investors: direct plan via AMC portal, MFU, MF Central, Coin, Groww, Kuvera, ET Money, INDmoney. Need advisory: SEBI RIA + direct plan. Avoid: distributor-routed regular plan without genuine value-add.
Migrate existing regular folios (optional)If you have legacy regular plans, switching to direct is a taxable event (see how-to-direct-to-regular-implications). Run the math: tax cost of switch vs. ongoing TER savings.

The direct vs regular plan decision is among the most consequential for long-term mutual fund returns in India. The TER difference, sometimes seemingly small, compounds dramatically over decades.

Conflict-of-interest disclosure. This guide is published by webnotes.in for informational purposes. WebNotes has no commercial relationship with any AMC, distributor, or RIA. No affiliate commission is earned from plan-type decisions. Mutual fund investments are subject to market risks.

Step-by-step procedure

See the procedure infobox above.

Numerical illustration

Scenario	Direct (12% return, 0.5% TER)	Regular (12% return, 1.5% TER)	Difference
SIP Rs 10,000/month, 20 years	~Rs 1.0 crore	~Rs 87 lakh	Rs 13 lakh
Lump-sum Rs 10 lakh, 20 years	~Rs 89 lakh	~Rs 73 lakh	Rs 16 lakh

The same scheme, same underlying portfolio, just different TER. The difference is purely the distributor commission compounded.

When direct is correct

DIY investor who picks own schemes.
Investor who uses a SEBI RIA (pays separate advisory fee).
Investor who can read scheme documents and factsheets without help.

When regular might be justified

The distributor provides genuine value-add beyond MF advice (estate planning, insurance, holistic financial planning) and you’re willing to pay via commission.
Behavioural coaching during corrections has tangible value for you (you’d otherwise panic-sell).
The accessibility constraint: you can’t (or won’t) operate online platforms.

Even in these cases, the SEBI RIA model (fee-only advisory + direct plans) is generally cheaper than distributor commissions over time.

Distributor channels to recognise

Bank branch (HDFC Bank, ICICI Bank, etc. selling MFs at the counter).
Independent Financial Advisor (IFA) via paper or platform.
Broker offering “regular” MFs alongside direct (some brokers route regular by default).
Insurance agents who also distribute MFs.

All of these earn distribution commission, paid from your TER.

Direct plan platforms (free access)

Type	Platform
AMC-direct portal	Each AMC’s website (e.g., sbimf.com, hdfcfund.com, icicipruamc.com)
RTA-direct	myCAMS , KFin KART , MF Central
Aggregator	Coin , Groww , Kuvera , ET Money , INDmoney , Paytm Money
Cross-AMC	MFU , MF Central

All these offer direct plans free of charge.

External references

References

SEBI (Mutual Funds) Regulations, 1996.
SEBI Master Circular for Mutual Funds: direct plan provisions.
SEBI (Investment Advisers) Regulations, 2013.
AMFI Best Practice Guidelines on direct and regular plans.

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Last reviewed: 19 May 2026
Conflicts of interest: WebNotes is independent. No relationship with any broker, registrar or bank named in this article.