Direct plans are slowly making inroads into the Indian mutual funds (MFs) industry. According to Prime MF Database, 51% of investments in debt funds are made through direct plans. About 16% of equity funds’ investments are through direct plans.
A direct plan is meant for those investors who wish to invest directly in a fund house without an agent’s help. Earlier, investors could invest directly, but a trail fee was deducted from the investment because these investors as well as those who came through agents subscribed to the MF scheme through a single net asset value (NAV). However, in case of a direct plan, it has a separate NAV which is higher than that of a regular plan, since its expense ratio is lower.
