Direct mutual funds are funds that are offered directly by the AMC to the customers. The broker that offers direct mutual funds doesn't get any commission or incentives from AMC. The savings from this is passed on to the customers. That results in better returns in comparison to the regular mutual funds.
Many online stock brokers in India offer direct mutual funds including Zerodha, 5paisa, Groww, and Paytm Money. These brokers offer a dedicated direct mutual funds platform (i.e. Zerodha Coin) which includes a mobile app and website. Some brokers like Zerodha offers Mutual Fund investment for free. Other brokers like 5paisa charge a flat rate per transaction fee.
Zerodha Coin is the best app for Direct Mutual Fund investment in India. Upstox doesn't offer Direct Mutual Funds. Groww is among the largest platform for investment in direct mutual funds.
Read more about Direct Mutual Funds:
Direct Mutual Fund and Regular Mutual Fund are two flavors of the same mutual fund scheme with the same portfolio, investment objective, risks, and fund manager. The only difference is, in the direct plan there is no commission given to the broker or agent. 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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Direct Mutual Fund |
Regular Mutual Fund |
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Broker doesn't get any commission from AMC for selling the funds to the customer. |
The broker gets upfront as well recurring trail commission from AMC. |
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No commission cost on the Mutual Funds earning. Saving is passed on to customers. |
Commission cost of yearly 0.05% to 2%. |
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The advisor or wealth manager cannot be biased as he is not getting any commission. |
The advisors are usually biased as they try to sell mutual funds where they get the highest commission. |
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Offer higher returns. |
Offer lower returns as commission cost is included in expenses. |
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Customers can buy them from AMC directly or through their brokers. |
These funds are sold through brokers or agents. |
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You need to do your own research to select funds. Some brokers offer selection tools. |
The broker assist you in choosing funds as per your goals and risk profile. |
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