Regular Plan
A version of a mutual fund scheme bought through a distributor, whose commission is embedded in a higher expense ratio.
Formula
Regular Plan Expense Ratio = Direct Plan Expense Ratio + Distributor Commission
Unit
%
In depth
The commission is trail-based, paid annually from the expense ratio for as long as the investment is held, rather than a one-time charge — so the cost continues long after the advice was given. This creates a structural incentive for distributors to recommend regular plans and to favour products paying higher trails. The plan is a reasonable choice for investors who genuinely use the distributor's service, and a poor one for those who simply were not told a direct plan existed. Switching from regular to direct is a redemption and a fresh purchase, so it triggers capital gains tax and possibly exit load.
Worked example
A 0.9-point commission on a ₹5,00,000 holding is ₹4,500 in the first year and continues every year the units are held. Over fifteen years on a growing balance, the total considerably exceeds the original commission's apparent size.
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 “Regular 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.