Direct plan adoption in India

Sat, 16 May 2026 00:00:00 +0000

The direct plan adoption trajectory in India describes the multi-phase structural shift in Indian mutual fund distribution since the SEBI January 2013 mandate requiring every open-ended scheme to offer a separate direct plan alongside the conventional regular plan. Direct plans, available exclusively to investors who transact without a distributor or broker intermediary, carry a lower Total Expense Ratio (TER) than the corresponding regular plan because no distribution commission is embedded. The structural growth of direct plans, from approximately 21 per cent of industry AUM in March 2016 to over 50 per cent by late 2025 and approximately 57 per cent by April 2026, is among the most consequential changes in the Indian mutual fund distribution landscape in the post-liberalisation era. The adoption has reshaped distribution economics, enabled a viable market for fee-based registered investment advisers (RIAs), and catalysed the rise of zero-commission digital platforms that have collectively acquired tens of millions of retail investors.

TER Differential on WebNotes

Direct plan adoption in India