How-to direct plan regular plan TER

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

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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 Editorial Team 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

ScenarioDirect (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 lakhRs 13 lakh
Lump-sum Rs 10 lakh, 20 years~Rs 89 lakh~Rs 73 lakhRs 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)

TypePlatform
AMC-direct portalEach AMC’s website (e.g., sbimf.com, hdfcfund.com, icicipruamc.com)
RTA-directmyCAMS , KFin KART , MF Central
AggregatorCoin , Groww , Kuvera , ET Money , INDmoney , Paytm Money
Cross-AMCMFU , MF Central

All these offer direct plans free of charge.

See also

External references

References

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

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The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

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WebNotes is independent. No relationship with any broker, registrar or bank named in this article.