‘Direct Plan' and 'Regular Plan’ are both part of the same Mutual Fund scheme, have the same/common portfolio and are managed by the same Fund Manager, but have different expense ratios (recurring expenses that are incurred by the Mutual Fund scheme).
Whether a fund is Direct or Regular, depends on the way its units are distributed to investors. If units of the fund are distributed by a distributor/agent, the Scheme is known as a “Regular” Mutual Fund Scheme. These distributors/agents generally charge a commission for distribution, which is included in the expense ratio of the Scheme. Hence, these Schemes have a higher expense ratio as compared to Direct Schemes.
Direct Schemes, as the name suggests, enable investors to purchase Mutual Funds directly from the Asset Management Company (AMC) or fund house, eliminating the need for an intermediary such as a distributor. No commission or fee is charged. These Schemes, therefore, have higher returns and lower expense ratios. On Dhan, we offer you Direct Mutual Funds which have no commissions or fees that are charged to you as an investor.