Direct Plan
A version of a mutual fund scheme bought without a distributor, carrying no commission and therefore a lower expense ratio.
Formula
Test: the investment is made directly with the fund house or through an execution-only platform, with no distributor commission embedded
Unit
%
In depth
Direct and regular plans hold identical portfolios managed by the same manager; the only difference is the commission, which is typically 0.5 to 1.0 percentage points a year in equity schemes. That gap compounds, so over a long horizon the direct plan's NAV pulls meaningfully ahead of the regular plan's for the same underlying performance. The trade-off is genuine for investors who value advice, since choosing direct means choosing without a distributor's guidance. A registered investment adviser charging a fee is a third route, separating advice from product commission.
Worked example
A regular plan at a 1.8% expense ratio and a direct plan at 0.9% hold the same securities. On ₹10,00,000 over 20 years at 12% gross, the direct plan ends at about ₹82.1 lakh against ₹69.8 lakh — a gap created entirely by commission.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Direct Plan” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.