Mutual funds are popular investment options among investors. They can effectively create wealth, and when it comes to investing, they offer two choices – direct and regular mutual funds.
Comparing direct and regular mutual fund solutions: What is right for modern investors?
Direct Mutual Fund
Regular Mutual Fund
Difference between Direct and Regular Mutual Fund Solutions
| Parameters | Direct Plans | Regular Plans |
| Expense Ratio | They have a lower expense ratio since no fees need to be paid for MFD services. | In comparison, they have a higher expense ratio. Investors pay for the professional services provided by the MFDs. |
| Professional Management | Investors are required to conduct their own research and make their own investment decisions. | Regular plans offer professional management to investors. Fund managers use their expertise to provide insights and updates. |
| Diversification | Investors may not diversify their portfolio due to a lack of knowledge and expertise. They might find it challenging to allocate their assets wisely. | Mutual fund distributors using top mutual fund software provide updates and diversify investors’ portfolios according to market corrections. |
| Emotional Bias | Due to personal biases towards a fund or company, investors may make emotional decisions that could hinder their investment goals. | In regular plans, MFDs avoid decisions based on emotional biases. They develop an investment strategy and balance risk and rewards. |
| Returns | Investors may achieve higher returns when choosing direct plans. However, if they don’t make informed decisions, their returns could be impacted. | Regular plans may yield lower returns compared to direct plans. Yet in the long term, making well-informed decisions with expert guidance, investors’ returns can potentially increase. |
| Net Asset Value | NAV can be higher in direct plans, meaning the cost of purchasing units is lower. | NAV can be lower in regular plans, meaning investors may need to purchase mutual fund units at a higher price. |
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