Mutual Fund:

A mutual fund is a type of investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments, and other assets. The fund is managed by professional money managers who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. Investors in a mutual fund own shares of the fund and are entitled to a portion of the profits and losses generated by the fund's investments. 

Mutual funds provide diversification, professional management, and liquidity to individual investors who may not have the time, knowledge, or resources to invest directly in the financial markets.

What is a Regular Mutual Fund?

A Regular mutual fund is purchased through intermediaries such as mutual fund distributors, brokers, or financial advisors who assist investors in selecting funds and managing the investment process. These intermediaries receive a commission from the Asset Management Company (AMC), which is included in the mutual fund's expense ratio. As a result, regular mutual funds have a higher expense ratio, which reduces the net returns to investors. Investors access regular plans via distributors' platforms or through their advice, benefiting from guidance and support.

What is a Direct Mutual Fund?

A Direct mutual fund, on the other hand, is purchased directly from the AMC without involving any intermediaries or distributors. Investors buy direct plans through AMC websites, apps, branches, brokers or via SEBI Registered Investment Advisors without any commission payment. This absence of distributor fees results in a notably lower expense ratio, meaning more of the invested money works towards generating returns, leading to potentially higher net returns over time.

Regular vs Direct fund Difference :

Feature	Regular Mutual Funds	Direct Mutual Funds
How to Purchase	Through distributors, brokers, or advisors	Directly from AMC via website, app, or branch
Expense Ratio	Higher due to distributor commissions	Lower with no distribution fees
Net Asset Value (NAV)	Slightly lower because costs are deducted	Higher due to lower expenses
Returns	Marginally lower due to higher expense ratio	Generally higher long-term returns due to cost savings
Investor Support	Includes professional guidance and advisory services	Investor manages investments independently
Convenience	Easier for beginners who prefer expert assistance	Requires investor to be confident and knowledgeable
Commission	Commission paid to intermediaries included in costs	No commission; savings passed on to investors

Regular Funds without Financial advice:

Few Bank portals or Platforms in India offer regular mutual fund plans as distributor intermediaries without personalized investment advice, allowing investors to choose funds independently. You might get a trusted banking interface but it comes with higher expense ratios due to embedded commissions. For lower costs and advisory options, investors may look to direct plans on independent fintech platforms or If you need advice switch to consult a Mutual Fund Intermediary providing financial advisory services.

How to Identify a regular mutual fund and direct mutual fund?

Feature	Regular Mutual Fund	Direct Mutual Fund
Purchase Channel	Through distributors, advisors, brokers	Directly via AMC website, office, or authorized platforms
Expense Ratio	Higher (commission included), Usually >1%	Lower (no commission to intermediaries)
Fund Name Suffix	Usually includes "Regular" or "Reg" in the scheme name	Usually includes "Direct" or "Dir" in the scheme name

Summary

• Both regular fund and direct fund plans invest in the same underlying portfolio managed by the same fund manager; the difference lies in the purchase route and associated costs.
• Direct plans have lower costs and therefore higher net returns over time but require investors to manage their investments themselves.
• Regular plans include brokerage commissions, which increase costs but provide investors with advisory support and convenience, suitable for those who prefer professional help.
• The NAV of direct plans is usually higher than that of regular plans due to lower expense ratios.
• Investors choosing between the two should consider their level of investment knowledge, desire for guidance, and cost sensitivity.

Choosing direct mutual funds can be more cost-effective for confident investors, while regular mutual funds may suit those seeking professional advice and easier management. But please be careful with platform offering regular plans without any professional advice.

Regards,

Honvest Team.