Direct vs Regular Plan in Multi Cap Funds: Which is More Suitable for You?

When you invest in multi cap mutual funds you gain exposure to India’s full market spectrum – large cap, mid cap and small caps - inside a single scheme. And every multi cap fund offers two purchase routes: direct and regular. The underlying portfolio is identical, but the cost you invest might not be. Over 10 to 20 years, a seemingly small expense ratio gap can snowball into lakhs of rupees.

This guide unpacks the direct vs regular plan in multi cap funds debate so you can decide which mutual fund plan is better for your goals and risk tolerance.

This guide unpacks the direct vs regular plan in multi cap funds debate so you can decide which mutual fund plan is suited to your goals and risk tolerance.

• Table of contents

• What is a direct mutual fund plan?
• What is a regular mutual fund plan?
• Key differences between direct and regular plans
• Which investors may prefer direct plans?
• Who may prefer regular plans?
• Which mutual fund plan is more suitable for you?

What is a direct mutual fund plan?

A direct mutual fund plan is bought straight from the asset management company (AMC) via its website, app, or RIA platform. There is no distributor involved, so the total expense ratio (TER) excludes commission and marketing costs. SEBI clarifies that while the portfolio is identical to the regular option, the cost structure is different, and over time the potential return advantage may compound.

What is a regular mutual fund plan?

A regular mutual fund plan, by contrast, routes every rupee through an intermediary – such as online brokers or independent mutual-fund distributors. Their commission, marketing and support costs are embedded in the TER. Although this makes the NAV a shade lower, many investors value the bundled services: product explanation, paperwork support, asset-allocation check-ins and behavioural coaching during market downturns.

SEBI requires AMCs to publish base and total TER daily so investors can see the rupee cost of that advisory layer.

Read Also: Direct vs Regular Mutual Fund: Differences and Which is better?

Key differences between direct and regular plans

Which investors may prefer direct plans?

• Self-directed investors who are comfortable researching multi cap mutual funds and executing transactions online.
• Investors already working with a fee-only, SEBI-registered investment advisor; advice is paid for separately, so a lower TER preserves potential returns.
• Long-term goal planners who review portfolios annually and want every basis point of potential compounding advantage.

Read Also: How to Switch From Regular Plan to Direct Mutual Funds?

Who may prefer regular plans?

• First-time market entrants who value human guidance on scheme selection, asset allocation, and paperwork.
• Individuals with complex finances, multiple goals, legacy assets, tax constraints – who might require holistic planning guidance.
• Busy professionals seeking transaction support, service follow-ups and behavioural coaching during market volatility.

Which mutual fund plan is more suitable for you?

Here are some guidelines one can follow to help decide which mutual fund plan to choose:

• Consider direct plans if you can research funds, rebalance periodically, and manage service issues, or if you already pay a fee-only advisor.
• Consider regular plans if you need ongoing nudges to invest, tailored recommendations, or prefer a single point-of-contact for all paperwork.
• Consider blending the two approaches by keeping core long-term holdings in direct plans while leaving tactical or complex allocations with a trusted advisor via regular plans.

Conclusion

In the debate of direct vs regular plan in multi cap funds, the portfolio allocation remains the same; however, the expense ratio differs. Historical evidence shows direct investors have retained more per year thanks to lower TERs, and over two decades that saving can potentially add to the final corpus. Evaluate your comfort with self-management, the tangible value you place on professional guidance, and your sensitivity to costs before choosing a path.

FAQs:

What is the difference between direct and regular plans in multi cap funds?

Both invest in the same stocks; direct plans exclude distributor commissions, so their TER and NAV are generally lower and higher respectively.

Can I switch from a regular plan to a direct plan in a multi cap fund?

Yes, but it counts as a redemption and new purchase – exit loads and capital gains tax may apply.

Do regular plans charge higher fees than direct plans?

Yes, their TER usually includes distributor commission, making it slightly higher than the direct variant.

Which is more suitable for new investors - direct or regular multi cap fund plans?

Those needing personalised guidance may favour regular plans, while digitally savvy beginners comfortable with research may consider starting with direct routes.