Many first-time investors explore different ways to grow their money—some start with stocks, while others prefer mutual funds.
For beginners, it’s important to know that mutual funds come in two main types based on how you invest: regular mutual funds and direct mutual funds.
Regular mutual funds are bought through a distributor or financial advisor.
Direct mutual funds can be purchased directly from the fund house or via online platforms like Groww or Zerodha (Coin).
Both types invest in the same schemes—the key difference is the investment route.
Key Differences Between Direct and Regular Mutual Funds
Expense Ratio: Direct funds have a lower expense ratio because no distributor commission is involved.
This means you keep a higher portion of your returns.
Regular Funds: These have a higher expense ratio since the distributor earns a commission for managing your investment, slightly reducing your overall returns.
Which one to choose depends on your confidence and experience in investing.
Regular funds suit beginners who want guidance, while direct funds are cost-efficient for those who can research schemes on their own.
Who Should Opt for Regular Mutual Funds?
Beginners with limited knowledge of investing or mutual funds.
Investors with diversified portfolios but little time to research schemes.
Those who prefer professional advice and ongoing support from a financial intermediary.
Who Should Choose Direct Mutual Funds?
Investors aiming to avoid distributor commissions and maximize returns.
Those who understand basic investing principles and mutual fund concepts.
Users of digital platforms like Groww or Zerodha who want the convenience of buying directly from a single place.
