What is the difference between a Direct and a Regular plan?
A mutual fund scheme is not one product but two. The Direct plan is sold by the fund house to the investor with no intermediary. The Regular plan is sold through a distributor, bank or advisor, and the fund house pays that intermediary a commission out of the scheme’s expenses.
Everything else is the same. Both plans hold one common portfolio, follow the same strategy and have the same fund manager. The only thing that differs is the expense ratio, and therefore the NAV: since the Regular plan deducts more cost each day, its NAV grows a little more slowly than the Direct plan’s NAV for the same scheme.
The real cost gap, fund by fund
The table below uses the expense ratios each fund house reported to AMFI, the industry body, as of 2026-09-30. The chart shows the all-in Total Expense Ratio for each plan of the same six schemes.
CHART
Total expense ratio (%) - Regular vs Direct plan, 6 real schemes
Each pair is the same scheme, same portfolio and same manager. Source: AMFI TER disclosure, 30 Sep 2026.
| Scheme | Regular base | Direct base | Regular total | Direct total | Gap |
|---|---|---|---|---|---|
| Parag Parikh Flexi Cap | 1.05% | 0.53% | 1.30% | 0.69% | 0.61 pts |
| DSP Value | 1.73% | 1.00% | 2.41% | 1.55% | 0.86 pts |
| ICICI Prudential Value | 1.20% | 0.80% | 1.56% | 1.09% | 0.47 pts |
| SBI Focused | 1.24% | 0.59% | 1.60% | 0.84% | 0.76 pts |
| Parag Parikh ELSS Tax Saver | 1.54% | 0.54% | 1.83% | 0.65% | 1.18 pts |
| SBI Multicap | 1.39% | 0.72% | 1.87% | 1.09% | 0.78 pts |
The gap runs from 0.47 percentage points (ICICI Prudential Value) to 1.18 percentage points (Parag Parikh ELSS Tax Saver). In every one of these schemes the larger part of the gap sits in the base expense ratio, the fee for running the scheme and compensating the distribution channel, rather than in the statutory levies. Levies are also higher in the Regular plan, because GST is charged on the fees themselves.
What the gap costs in rupees
On a ₹10,00,000 holding in Parag Parikh ELSS Tax Saver, the Regular plan costs about ₹18,300 a year against ₹6,500 for the Direct plan, a difference of ₹11,800 a year. In ICICI Prudential Value the same holding costs ₹15,600 versus ₹10,900, a difference of ₹4,700 a year. These are simple multiplications of the reported ratios before any growth, not a forecast of returns. Because fees are deducted from the fund’s assets, the money paid out stops compounding, so the long-run difference is larger than the yearly figure - use the Direct vs Regular calculator to see that compounded cost for your own fund’s ratios and SIP amount.
When a Regular plan can make sense
The commission in a Regular plan pays for a service: advice, paperwork, reminders and behavioural coaching. If that service stops you from selling in a panic or helps you pick suitable funds, it may be worth its price, and that is a personal judgement. What it cannot do is change the fund itself, since the portfolio is identical. A Regular plan therefore has to earn its extra cost through your own decisions rather than through better fund performance, because the fund’s Alpha and returns are the same before costs.
Switching from Regular to Direct is treated as a redemption and a fresh purchase, so it can trigger capital gains tax and exit load. Check both before moving existing holdings.
WHAT THIS MEANS FOR YOU When you compare two funds, compare the same plan type. A Regular-plan return set against a Direct-plan return makes the Direct fund look better only because it is cheaper, and the reverse is also true. Every Punji page that shows an expense ratio, including the expense ratio term, uses the Direct plan unless it says otherwise.
METHODOLOGY Base expense ratio, statutory levies and Total TER as of 2026-09-30, from AMFI Total Expense Ratio disclosure (TER file, 30 Sep 2026). Total TER includes the base expense ratio, brokerage, transaction costs and statutory levies including GST, so it is not simply the base ratio plus levies. Rupee figures are arithmetic on those ratios. Not investment advice.