Difference between Direct Mutual Fund and Regular?

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Mutual funds are sold to investors by the Asset Management Companies (AMC's) in two ways.

  1. Through agents who take a commission
  2. Directly to customers or via agents who don't take a commission

The same mutual fund scheme with the same portfolio, investment objective, risks, and fund manager is available in two ways.

Regular Mutual Fund

A regular mutual fund is a fund that is sold through an agent who gets a commission for selling them. For agents, earning higher commissions becomes the objective instead of choosing the correct funds as per the customer's goals and risk profile.

Direct Mutual Funds

A direct mutual fund is a fund that is sold directly by the AMC or through an agent who doesn't take the commission. The savings from this is passed on to the customer who earns higher returns on investment. Most direct mutual funds earn around 1.5% more per year in comparison to the Regular Mutual Fund.

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