Money word, in plain English ← Back to all terms
Direct plan
A version of a mutual fund scheme bought without a distributor, so it costs less each year.
Example. The direct plan of a scheme has a lower expense ratio than its regular plan.
Every mutual fund must offer two plans. A regular plan pays commission to whoever sold it to you. A direct plan does not, so it carries a lower expense ratio and a slightly higher NAV over time. Same scheme, same portfolio, same fund manager, different cost. If you pick funds yourself, the direct plan leaves more money with you. A regular plan is what pays for genuine advice, so the thing to avoid is holding one while receiving no advice at all.
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