Neutral impactSector
Over 63% of retail mutual fund AUM is in regular plans: Why is SEBI pushing direct plans? Experts explain pros and cons
Mint 1 hr ago·30 Oct 2026, 10:47 am
SEBI has mandated that direct mutual fund plans become the default option on Asset Management Company (AMC) websites and apps starting November 1. This move aims to reduce the high cost of regular plans, which currently account for over 63% of the industry's assets under management (AUM). By making direct plans the default, the regulator hopes to encourage investors to bypass the commission paid to distributors and invest directly with the fund house.
For investors, this change could lead to significant savings over time. Since regular plans charge an additional expense ratio for the distributor's commission, direct plans typically have lower costs. However, investors must be prepared to manage their investments independently, as they will no longer receive the personalized guidance and support provided by a distributor.
Moving forward, investors should evaluate their specific needs. While direct plans offer cost efficiency, they require more active management. Those who prefer professional advice and ongoing monitoring may still opt for regular plans despite the higher fees. The key is to understand the trade-off between lower costs and the value of advisory services.
Excerpt from Mint
SEBI will make direct mutual fund plans the default option on AMC digital platforms from November 1. With regular plans still accounting for 63.3% of retail mutual fund AUM, experts explain why investors choose them and how the new rule could impact them. Direct and regular plans of a mutual fund scheme hold the same…Read the original at Mint
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