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Direct plan

Updated on March 15, 2023

Direct Plan means investing in a Mutual Fund scheme directly with the issuer of the fund without the help of a distributor, agent or third party. In the absence of an agent or distributor, the cost of investing in a mutual fund becomes lower. Investors who have the knowledge of investment products and who can choose the right fit on the basis of their own research and analysis can pick direct funds. Investing in a Direct plan would include the entire process from choosing the fund, tracking its performance to portfolio review at regular intervals.

What are the features of Direct Plan?

Key features of a Direct plan are:
1. Investors can invest directly with the Mutual Fund company without involvement of any third party
2. Investment can be done offline/online, directly through the AMC or through online platforms providing this service
3. The expense ratio of the scheme is low as there are no commission, brokerage or distribution charges
4. NAV of a Direct plan will be higher
5. Returns from a Direct plan over the long term are more than a regular plan and help in creating a bigger corpus

What are the benefits of Direct Plan in mutual funds?

Benefits of a direct plan are:
1. Investors who can directly interact with individual fund houses rather than intermediaries can invest through direct plans
2. Informed investors with good knowledge of mutual funds can increase their returns reasonably by reducing the expense ratio through an investment in direct funds