What is The Basoc Difference Between Direct Mutual Funds & Regular Mutual funds ? Let’s Have look On It…
Mutual Fund is bordly classified as Direce Mutual Fund and Regular Mutual Fund. These two types of
Mutual Fund can be explained as follows:
Benefit of Direct Plan over Regular Plan:
In case of Direct plan, cost of commission is saved as the plan dose not involve the intermediaries of AMC. This cost of commission is added back to the NAv and hence reduce the expense ratio. In turn, investors receive additional return on this added amount. On cuntray, in regular plan, cost of commission is incurred by AMC and is charged from NAV. So, regular plan is having less NAV than that of direct plan. Is is evident thant on an averge the difference between expense ratio of direct plan and regular plan is about 1%. Consequently, someone can earn higher return in direct plan than regular plan by the advantage of this expense ratio difference.
Benefit Of Regular Plan over Direct Plan:
Regular plan includes the involvement of the intermediaries or advisory of AMC. This plan is basically suitable for those insvestors who are actually not enough comfortable with their investment decisions. If someone has shortage of time and do not have the expert skills, advisors offer services of reviewing investment on a timely basis and give there expart advice to transact with the fund respectively. Advisors also provide additional services of portfolio tracking and changes.
Before concluding, an important fact to be start that it is mandatory for an investor to choose an effective and suitable mutual fund plan depending on their respective criterions.