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Direct Mutual Funds vs Regular Mutual Funds

Direct Mutual Funds or Regular Mutual Funds – Which one should I prefer?

In today’s world on online buying, people prefer buying directly from the seller or service provider instead of buying it from middle men. While in terms of products this has proved quite successful and cost effective in terms of services we often encounter service issues.

When it comes to investing in mutual funds every investor has got 2 options to invest in a same fund. Direct option wherein the investor places his investment request directly to the mutual fund Company (AMC). While the most popular option is regular option, wherein, the investment is done with the support of a mutual fund advisor.

Mutual funds are subjected to market risks. One must have a proper awareness about his Risk Appetite, the type of fund he intends to invest, his goal and the period of his investment. Based on these factors the investment in the type of mutual fund is determined.

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For example

If Mr. Amit who is 35 years old intend to invest in mutual funds for his retirement plan that means he has over 20 years to give for his investment. He can invest in high risky funds such as mid cap and small cap funds. But if Mr. Amit wants to invest for buying a home in next 3 years it is not advisable for him to invest in high risky funds. He will be advised to invest in a balanced fund.

While all funds whether large cap or mid cap, debt fund or a balanced fund, are all good they are meant for different objective and risk appetites. One needs to understand these factors before investing. Just because one fund works good for my friend the same need not work for me.

Direct Funds: These are the funds which are directly invested in the markets, without any agent in middle. However you will have to do the evaluation of funds on your own before investing in direct funds.

Regular funds: Here an advisor will understand your requirement and suggest you which fund is best suited for you to invest. Under regular fund a 24×7 help will be provided by the advisor. If at certain point, the fund does not perform as per your expectation, he will evaluate the reasons and advise you whether to shift the investment to new fund or hold on the same fund.

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Difference between direct and regular mutual funds

Real Time difference between Direct and Regular Funds

If Mr. X and Mr Y have invested Rs. 1000 for 5 years regularly in SIP, then their present value as on 1st June 2019 would be

Thus we suggest you to go for a Regular mutual fund investment schemes.