Definition of Direct Plan
A direct plan is a version of a mutual fund scheme where you invest directly with the Asset Management Company (AMC), bypassing distributors or advisors. Because there is no commission paid to a middleman, direct plans have a significantly lower expense ratio than regular plans.
The difference in expense ratio between direct and regular plans is typically 0.5% to 1.5% per year. Over 20–25 years of investing, this seemingly small difference compounds into lakhs or even crores of additional corpus. SEBI introduced direct plans for all mutual fund schemes in January 2013.
Direct plans can be accessed through AMC websites, the MF Central platform, or apps like Zerodha Coin, Groww, ET Money, and Kuvera. For a long-term investor, always choosing direct plans over regular plans is one of the highest-return decisions you can make.