10 Differences Between direct and regular mutual fund

The Difference between Direct Mutual Funds and Regular Mutual Funds

Investing in mutual funds is a popular way to grow wealth and achieve financial goals. While exploring mutual funds, you may come across two terms – direct mutual funds and regular mutual funds. In this article, we will dive deep into what these terms mean, their examples, uses, and ultimately understand the key differences between them.

What are Direct Mutual Funds?

Direct mutual funds are investment options that allow investors to directly invest in a scheme without the involvement of intermediaries like agents, brokers, or distributors. Investors can deal directly with the asset management company (AMC) or the fund house.

Examples of Direct Mutual Funds

Some popular direct mutual funds include:

  • Axis Direct Mutual Fund
  • Mirae Asset Direct Fund
  • SBI Direct Mutual Fund

Uses of Direct Mutual Funds

Direct mutual funds offer several advantages:

  • Lower expense ratios as there are no distributor commissions.
  • Transparency in the investment process.
  • Easy online transactions without the involvement of intermediaries.

What are Regular Mutual Funds?

Regular mutual funds, on the other hand, involve intermediaries in the investment process. When investing in regular mutual funds, investors go through agents, brokers, or distributors who assist in the selection and transaction of the funds.

Examples of Regular Mutual Funds

Some popular regular mutual funds include:

  • HDFC Regular Mutual Fund
  • ICICI Regular Mutual Fund
  • Reliance Regular Mutual Fund

Uses of Regular Mutual Funds

Regular mutual funds offer the following benefits:

  • Guidance from trained financial advisors.
  • Convenience in managing investments through intermediaries.
  • Access to research reports and expert recommendations.

Differences between Direct Mutual Funds and Regular Mutual Funds

Difference Area Direct Mutual Funds Regular Mutual Funds
Expense Ratio Lower, as there are no distributor commissions. Higher, due to distributor commissions.
Investor Accessibility Directly deal with the AMC or the fund house. Deal with intermediaries such as agents or distributors.
Cost Efficiency Lower expense ratio translates to higher returns. Higher expense ratio reduces overall returns.
Transparency Complete transparency in investment process. Transparency may vary depending on the intermediary.
Investment Options Wide range of direct mutual funds available. Restricted to mutual funds recommended by intermediaries.
Online Transactions Investors can easily transact online. Transactions are facilitated through intermediaries.
Expert Advice No dedicated financial advice from intermediaries. Access to expert advice and research reports.
Upfront Charges No upfront charges as there are no intermediaries involved. May involve upfront charges due to intermediaries.
Direct Control Investors have direct control over their investments. Investments are managed by intermediaries.
Taxation No additional commission-based taxation. Additional tax implications due to intermediaries.


Choosing between direct mutual funds and regular mutual funds depends on an individual’s investment style and preferences. Direct mutual funds offer lower expense ratios, transparency, and ease of transactions, while regular mutual funds provide guidance, convenience, and expert advice. It’s essential to evaluate your investment goals and consider the associated costs and benefits before making a decision.

People Also Ask

Here are five common questions regarding direct and regular mutual funds:

  1. 1. What are the key advantages of direct mutual funds?
    Direct mutual funds provide lower expense ratios, transparency, and easy online transactions without intermediaries.
  2. 2. Why would someone choose regular mutual funds over direct mutual funds?
    Regular mutual funds offer the convenience of intermediaries, expert advice, and access to research reports.
  3. 3. Are there any extra charges associated with regular mutual funds?
    Yes, regular mutual funds may involve upfront charges due to intermediaries.
  4. 4. Do direct mutual funds have better tax implications?
    Direct mutual funds generally do not have additional commission-based tax implications.
  5. 5. Can I switch from regular to direct mutual funds?
    Yes, you can switch between regular and direct mutual funds. However, switching may involve certain charges and procedures depending on the AMC.

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