SEBI takes a major step! 'Direct plans' in mutual funds made the default option; investors to benefit..

If you invest in mutual funds, this news is relevant to you. Starting November 1, 2026, some major changes are set to be implemented regarding mutual fund regulations. At an event, SEBI official Tuhin Kanta Pandey clarified that 'Direct Plans' will now be the default option on the digital platforms of mutual fund companies.

This essentially means that whenever you go to invest via an app or website, the 'Direct Plan' will be the first option you see. Furthermore, if you choose a 'Regular Plan,' you will be informed that it entails higher costs compared to a 'Direct Plan.'

What is the difference between Direct and Regular plans?
When investing in mutual funds, you can choose between Direct and Regular plans. In a Direct Plan, you invest directly with the mutual fund company; there are no intermediaries—such as agents or distributors—involved, so no commissions are paid. In a Regular Plan, you invest through an agent or distributor. Because the agent's commission is included, the 'expense ratio' (the cost of the investment) is slightly higher.

How much of an impact does the expense ratio have?
The expense ratio is the fee charged by mutual fund companies for managing your money, which directly affects the returns on your investment. Opting for a Direct Plan means you must make your own investment decisions, whereas a Regular Plan provides you with the guidance of an agent or distributor. SEBI has introduced this measure to ensure that investors have a clear understanding of all associated costs, enabling them to make well-informed decisions.

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