10 Differences Between regular and direct mutual fund

Regular vs Direct Mutual Funds: Understanding the Differences

Investing in mutual funds has become an increasingly popular choice for individuals looking to grow their wealth. However, many investors may find themselves confused when it comes to choosing between regular and direct mutual funds. In this article, we will explore the differences between these two options, highlighting their uses and benefits.

What is a Regular Mutual Fund?

Regular mutual funds are those that are purchased through a financial advisor or intermediary. These intermediaries, often referred to as mutual fund distributors, provide valuable guidance and assistance throughout the investment process. They offer personalized advice and help investors understand the various fund options available. This human interaction comes at a cost, as regular mutual funds charge an expense ratio that includes distribution fees.

Examples of Regular Mutual Funds:

  1. HDFC Equity Fund
  2. SBI Bluechip Fund
  3. ICICI Prudential Bluechip Fund

Uses of Regular Mutual Funds:

Regular mutual funds are ideal for first-time investors or those who prefer professional assistance in managing their investments. They are also suitable for individuals who lack the time, knowledge, or confidence to make investment decisions independently.

What is a Direct Mutual Fund?

A direct mutual fund, on the other hand, allows investors to invest directly with the fund house without any intermediaries. This means that there are no distribution fees involved, resulting in lower expense ratios compared to regular mutual funds. Investors can directly access and invest in direct mutual funds through the fund house’s website or through online investment platforms.

Examples of Direct Mutual Funds:

  1. Axis Bluechip Fund Direct Growth
  2. Mirae Asset Emerging Bluechip Fund Direct Growth
  3. Kotak Standard Multicap Fund Direct Growth

Uses of Direct Mutual Funds:

Direct mutual funds are preferred by knowledgeable and experienced investors who are comfortable making their own investment decisions. They allow investors to maximize their returns by cutting out the middleman and avoiding the additional expenses associated with regular mutual funds.

Differences Between Regular and Direct Mutual Funds:

Difference Area Regular Mutual Fund Direct Mutual Fund
Expense Ratio Includes distribution fees, resulting in a higher expense ratio. Does not include distribution fees, resulting in a lower expense ratio.
Investment Research Relies on the advice and research provided by the financial advisor or intermediary. Requires investors to conduct their own research and make independent investment decisions.
Professional Assistance Provides personalized advice and assistance throughout the investment process. Investors need to make investment decisions independently without professional guidance.
Accessibility Can be accessed through financial advisors, brokers, and intermediaries. Can be accessed directly through the fund house or online investment platforms.
Minimum Investment May have higher minimum investment requirements set by intermediaries. May have lower minimum investment requirements set by the fund house.
Cost of Transactions May include additional transaction fees such as entry or exit loads. Generally have lower transaction costs as they eliminate entry or exit loads.
Transparency Investors may have limited visibility into the actual expenses incurred. Provides complete transparency in terms of expenses and holdings.
Flexibility May offer fewer options as intermediaries often limit fund choices. Provides a wider range of fund choices as they eliminate intermediaries.
Return on Investment Expenses may reduce the overall returns generated by the mutual fund. Lower expenses can potentially result in higher overall returns on investment.
Tax Efficiency Investors may be subject to capital gains tax on redemption or switch transactions. May offer tax benefits such as the taxation rate and indexation benefits.


In summary, regular mutual funds are designed to cater to investors who seek professional advice and assistance, while direct mutual funds target experienced investors who prefer to manage their own investments. The key differences lie in cost, accessibility, research responsibility, transparency, and flexibility. It is crucial for investors to evaluate their own preferences, investment knowledge, and financial goals before choosing between regular and direct mutual funds.

People Also Ask:

  1. Which type of mutual fund is better for beginners?
  2. Regular mutual funds are recommended for beginners as they provide the necessary guidance and assistance to navigate the complex world of investments.

  3. Can I switch from a regular mutual fund to a direct mutual fund?
  4. Yes, most regular mutual funds offer an option to switch to direct mutual funds. However, switching may involve exit loads or transaction costs, so it is advisable to evaluate the costs and benefits before making a decision.

  5. Are direct mutual funds riskier than regular mutual funds?
  6. No, the level of risk in both types of mutual funds is the same. The primary difference lies in the cost structure and the level of control investors have over their investments.

  7. Do direct mutual funds always perform better than regular mutual funds?
  8. Performance depends on various factors such as market conditions, fund management, and investment strategy. While direct mutual funds may have lower expenses, it does not guarantee better performance.

  9. Can I invest in both regular and direct mutual funds?
  10. Yes, investors can diversify their portfolio by investing in both regular and direct mutual funds. However, it is important to consider the overall cost and performance of the funds.

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