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Regular vs direct mutual funds: Higher expense ratio isn’t the only drawback; what else investors should know
Mint 1 hr ago·8 Oct 2026, 5:07 am
Mutual funds offer two primary ways to invest: direct plans and regular plans. The main difference lies in the cost structure. Regular plans charge a higher expense ratio because they include commissions for intermediaries like distributors or agents. Direct plans, managed by investors themselves, have lower fees. However, the higher cost of regular plans is not the only factor to consider. These plans often come with bundled services, such as financial planning advice or support for complex investments, which might be valuable for some investors.
For long-term investors, the impact of fees can be significant. A lower expense ratio in direct plans can lead to higher returns over time due to the power of compounding. However, the choice depends on the investor's comfort level. If you are confident in your investment knowledge and don't need advice, a direct plan is often the more cost-effective choice. Conversely, if you prefer guidance and support from a professional, the extra cost of a regular plan might be justified.
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