Investment: Do you invest in direct plans or regular plans? Find out which one benefits you more..

Do you invest in direct plans or regular plans of mutual funds? Initially, both investment methods may seem similar, but there is a difference in returns over the long term. Direct plans offer slightly higher returns than regular plans. This is why investor interest in direct plans is growing. CRISIL Intelligence analyzed data from AMFI, which reveals this rising interest among investors.

**Growing Investor Interest in Direct Plans**

CRISIL Intelligence found that the share of direct plans within retail mutual fund assets has increased. It rose from 21.4% in March 2021 to 36.7% in March 2026. This means that five years ago, slightly more than one rupee out of every five invested in retail mutual funds went into direct plans. Today, one out of every three investments is made through a direct plan.

**Direct and Regular Plan Options in Every Scheme**

Almost every mutual fund scheme offers both direct and regular plan options. Both plans invest in the same underlying scheme; the only difference lies in the investment method. When an investor invests in a scheme directly—without involving a mutual fund distributor—they use the direct plan. Conversely, investing through a distributor means using the regular plan.

**Direct Plans Have a Relatively Lower Expense Ratio**

The biggest difference between the two plans is the cost. Direct plans have a lower expense ratio because they do not include distributor commissions. Regular plans have a higher expense ratio as they incorporate the distributor's commission. Consequently, a difference in the Net Asset Value (NAV) is observed between the direct and regular plans of the same scheme.

Direct plans' share of total assets is rising

As of March 2026, the AUM of direct plans stood at ₹33.28 lakh crore. This represents 45.1% of the industry's total assets, up from 43.4% in March 2021. Conversely, the share of regular plans in total assets has declined, falling from 56.6% to 54.9% during this period. Nevertheless, it remains the more widely used investment route, with an AUM of ₹40.46 lakh crore.

Disclaimer: This content has been sourced and edited from Money Control. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.