All about Direct Mutual Funds

Direct Plans are cheaper - but meeting goals is more important!

Direct plans of Mutual Funds were brought about to give investors the freedom to invest directly with asset management companies and save costs. Unfortunately, this led to a lot of people investing without proper advice and failing to achieve their financial goals. Make sure the cost saving of direct plans isn't coming at the bigger cost of not meeting your goals!

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Frequently Asked Questions – Direct Mutual Funds


What is the purpose of Direct Mutual Funds?


Mutual Fund Direct Plans were created to empowered investors by giving them choice & control over fees. The main purpose was to give a large institutions and investors to negotiate fees for advice. By introducing direct funds and capping total expense ratio’s a fantastic balance was brought in keep the interests of all investors


What is the difference between direct and regular mutual fund?


In a direct mutual fund, there are no distribution expenses built in. Therefore, they on average have a total expense ratio (TER) that is cheaper by approximately 0.5% per annum. However, direct plans are usually offered by online platforms that either use mutual funds as a ‘hook’ to position high cost products later.


Should I buy direct mutual funds online?


If you are a first-time investor, the best way to invest in direct mutual funds is with the support of a professional and competent advisor. Avoid the temptation of just going online and buying a direct mutual fund based on past returns or incomplete information.


Should retail investors opt for a direct investment?


For retail investors regular funds and having an investment expert for guidance remains the best choice. It would be best to avoid investing into a direct mutual fund because that would usually mean that the investor would be unadvised and may end up making many investing mistakes along the way.


How important is professional advice when it comes to making a direct mutual fund investment?


Direct mutual fund has been wrongly interpreted by many as a way to avoid professional advice. Nothing could be more detrimental. Professional advice is a must and the cost of the same can be negotiated depending on the investment volume.



What should I consider before investing into a small cap fund direct growth?

The decision to invest into a  small cap fund direct growth should be considered keeping your financial goals in mind. Small caps can be extremely volatile in nature and can in fact amplify behavioural biases like greed and fear. It would be best to invest in such a fund after consulting with a professional financial advisor who can define your financial goals clearly before suggesting an investment.

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