Direct vs Regular Mutual Funds: Which is best?
Direct vs Regular MF's: Which is best?
Regular MF's are those which are sold to customers via intermediaries and hence receive a commission from the MF House (usually around 1% of NAV).
Direct MF's are those which one buys directly from the MF house site, or from a 3rd party who is selling Direct MF's (either free/at a nominal transaction fee - but not commission). Since there is no intermediary involved, there is no question of any commission being paid by the MF house for the sale.
Purchase Direct MF's from different fund houses under one login for FREE. https://bit.ly/2Cd56Tk
Differences between Regular and Direct Funds:
1. NAV of Direct funds is always higher than a Regular Fund!
2. The AuM (Asset under Management) or simply the Funds collected from clients is always higher in Regular funds vs Direct funds - this goes to say that most investors are lured towards regular funds without them even knowing of the difference between the two
3. Most Direct funds would have begun at a much later date (some times years later) when compared to a Regular Fund! - this means that the same MF has given more returns with much lesser investment
How to recognize:
Easy, Every MF has the suffix Regular/Direct at the end of the naming nomenclature. Sometimes, abbreviations are used such as Reg/R for Regular and Dir/D to indicate Direct funds. But what if you happen to purchase from a place that only offers Direct MF's? chances are that they might not specify whether it is Direct/Regular since they might only deal with Regular Funds in the pretext of offering MF's from multiple houses under one login without any transaction charges! Here, since they simply don't offer Direct funds, and hence they don't specify or add a suffix at the end to indicate if it is Direct or Regular. So the customer ends up purchasing Regular funds all the time. Here the seller gets a commission from the MF house for the sale.One such Regular MF portal is Funds India: Here they offer only Regular Funds from various fund houses and thus are entitled to receive a commission from the fund house. So, buying MF's from here will only result in acquiring Regular funds, but the advantage is that one can purchase funds from all MF houses under one single login and is a hassle free experience.
But times have changed, and now there are companies with different business models who have come up to offer Direct mutual funds, all under one login and FREE of any transaction charge!GROWW is one such place. Here you can purchase Direct MF's from different fund houses, under a single login. check out the link:
https://groww.app.link/VN6BkpBf6M
GROWW claims that you can earn upto 1.5% extra by buying direct mutual funds as compared to buying regular funds.
GROWW has become India's fastest growing Direct Mutual Funds app with more than 1 Million users. https://groww.app.link/VN6BkpBf6M
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