Direct vs Regular Mutual Funds
- December 8, 2021
- Posted by: MvM Team
- Category: Mutual Funds
Direct Funds:
Funds that are offered directly by the fund house without the involvement of any third party like a broker or any other intermediary. These funds are characterized by a low expense ratio due to the absence of any third-party commissions. One can earn an extra return of up to 1.5% per annum by investing in direct funds.
Regular Funds:
Regular mutual funds are funds that are sold through an intermediary like a broker, advisor or distributor. These funds have higher expense ratio because the fund house needs to compensate the intermediary for their services.
Direct vs Regular Mutual Funds:
Parameter | Direct Mutual Fund | Regular Mutual Fund |
Third-party | No | Yes |
Returns | Higher | Lower |
Expense ratio | Lower | Higher |
Market Research | Done by self or RIA* | Done by broker |
Investment Advice | Self or RIA* | Provided by broker |
Mis-selling | No chance | YES, you might be advised those funds on which they earn higher commission |
Documents and KYC | Self or RIA* | Collected by broker |
*RIA: Registered Investment Adviser
