The Regular vs. Direct Mutual Fund calculator lets you easily estimate the amount of expenses you would pay on your Mutual fund investment in a regular plan vs. a direct plan.
What are direct and regular mutual funds?
All mutual fund investments are offered in two flavors - direct and regular. Direct plans are bought directly from the AMC or via SEBI-registered investment advisors. Here, there is no third party involved in the transactions. Hence, there is no brokerage or commission charged to the mutual funds.
Regular funds are sold via third parties (agents/ distributors/ brokers). Hence, these intermediaries receive a commission for their services from the mutual fund company (AMC). This is charged in the form of a higher expense ratio to the investor.
This is why the expense ratio of a regular mutual fund is higher than that of the direct version - for the exact same investment scheme and plan option. SEBI initiated direct plans in 2012 to allow investors the option to invest without any intermediary and hence save on the extra expense ratio charges.
What is a regular vs. direct mutual fund calculator?
The regular vs. direct mutual fund calculator is a tool that calculates the expenses of your mutual fund investment in regular and direct funds. You can input a few basic details to get an estimate of how much you would pay in expenses over time.
The calculator will show you the estimated amount of money you would save in commissions by investing in direct funds vs. a regular fund.
How to use the regular vs. direct SIP calculator?
The calculator requires a few basic inputs:
- Fund: Select the fund for which you would like to compare regular vs. direct expenses (expense ratio)
- Return: Select the return per annum you would like to assume.
- Investment Amount: Select the investment amount you would like to view the expenses calculator for
Once you follow the above steps, the calculator shows you the estimated expenses you would pay the AMC on your regular and direct fund mutual fund investment. You can choose to view the same for different time periods too like the 3, 5, or 10-year investment period.
What are the benefits of the regular vs. direct calculator?
Estimated commissions
The key benefit of the regular vs. direct fund calculator is that it estimates the amount of commission you would save by investing in direct funds vs. regular funds for different time periods. This gives you an estimate of the cost of using a third-party intermediary (brokers/ agents/ distributors or advisors) for investing in mutual funds.