Direct vs Regular Mutual Funds: What Should You Choose in 2025?
Choosing between Direct and Regular Mutual Funds is one of the earliest and most important decisions every new investor must make. With the mutual fund industry in India having witnessed rapid growth in recent years, this choice can significantly impact your long-term investment returns.
While direct mutual funds offer lower costs and greater transparency, regular plans provide convenience and guided assistance. Which route is right for you? Let’s break down the differences between direct and regular mutual funds to help you make an informed investment decision in 2025.
What Are Direct Mutual Funds?
Direct mutual funds are purchased directly from Asset Management Companies (AMCs) without the involvement of intermediaries like brokers or distributors.
Key Features:
No commission costs: Direct funds eliminate distributor commissions.
Lower expense ratios: With no intermediaries, the cost of managing the fund is reduced.
Higher returns potential: Savings on costs translate to better compounding and improved wealth creation over time.
Investor autonomy: Investors are responsible for fund selection and portfolio management.
Direct plans can be accessed through:
AMC official websites
Registrar platforms like MF Central
Mutual Fund Utility (MFU)
What Are Regular Mutual Funds?
Key Features:
Commission costs included: A portion of the expense ratio goes toward distributor commissions.
Higher expense ratios: The overall fund management cost is higher compared to direct plans.
Ease and support: Brokers assist with transactions, KYC, fund recommendations, and portfolio tracking.
Ideal for beginners: Those new to mutual funds benefit from handholding and expert advice.
Regular mutual funds can be a comfortable choice for investors seeking convenience and professional guidance.
Direct vs Regular Mutual Funds: Key Differences
Feature Direct Mutual Funds Regular Mutual Funds
Purchase Method Directly from AMC, RTA, or DIY platform Through broker or mutual fund distributor
Expense Ratio Lower due to no commissions Higher due to embedded commissions
Returns Higher returns over the long term Slightly lower returns due to higher costs
Control Full investor control Broker-managed and assisted
Transparency Full visibility into costs and holdings Limited transparency
Convenience Requires self-research Professional assistance provided
Why Should You Choose Direct Mutual Funds?
1. Lower Expense Ratios
In direct plans, the absence of distributor commissions significantly reduces the expense ratio. Typically:
Direct equity mutual funds: ~1%
Regular equity mutual funds: 2%–2.5%
This 1% difference might appear minimal but compounds dramatically over the years, boosting your final returns.
2. Higher Returns
A lower expense ratio leaves more of your money invested, enabling greater wealth accumulation over time. Direct funds ensure that your returns are not eroded by unnecessary costs.
For instance, a ₹10,000 monthly SIP over 10 years in a direct plan could save you more than ₹1 lakh in commissions compared to a regular plan.
3. Transparency and Control
Direct plans offer complete transparency in terms of costs and fund performance. There are no hidden commissions, and you are fully in control of choosing funds based on your financial goals and risk appetite.
4. Avoidance of Mis-selling
Since brokers earn commissions in regular funds, they might recommend high-commission funds over more suitable ones.
5. Empowering Informed Decision-Making
Direct investors can use tools like SEBI-registered fee-only advisors who provide unbiased recommendations without any hidden agendas.
When Are Regular Mutual Funds a Better Choice?
While direct mutual funds offer cost advantages, regular funds are more suitable in the following scenarios:
1. For First-Time Investors
If you are new to mutual fund investing and find it challenging to evaluate funds or manage a portfolio, working with a broker or distributor can provide you with guided support.
2. For Investors Who Value Convenience
Busy professionals or those not keen on actively managing their portfolios can benefit from the professional assistance that regular funds offer.
3. For Those Seeking Expert Advice
Brokers often provide access to research reports, fund recommendations, and performance reviews—valuable for individuals lacking the time or expertise to monitor investments.
Direct vs Regular Mutual Funds: Long-Term Wealth Impact
Consider this:
Monthly SIP: ₹10,000
Investment Horizon: 20 years
After 20 years:
Direct Plan Value: ₹99 lakh+
Regular Plan Value: ₹88 lakh+
A ₹10 lakh+ difference — purely due to the lower cost structure of direct plans!
How to Invest in Direct Mutual Funds?
AMC websites
Mutual Fund Utility (MFU) portal
RTA websites like CAMS and KFintech
Investment platforms like Groww, Paytm Money, Kuvera, Zerodha Coin
Through SEBI-registered fee-only financial advisors
Conclusion
The choice between Direct vs Regular Mutual Funds should depend on your investment knowledge, comfort level, and long-term goals.
Choose Direct Mutual Funds if:
You want lower costs and higher returns.
You prefer complete control over your investments.
You are willing to research or consult unbiased financial advisors.
Choose Regular Mutual Funds if:
You need guidance and personalized support.
You prioritize convenience over cost savings.
For most financially literate and goal-focused investors, Direct Mutual Funds present a clear advantage by maximizing returns and minimizing costs over the long run.