Investors who had invested in mutual fund schemes via direct plans will be elated as these plans have delivered better gains than that of regular plans in the one-year period ended March 29.
Typically, when an investor who wishes to invest in a MF scheme, she has to go through brokers or intermediaries/distributors/advisors. The intermediaries charge a brokerage fee for their services.
The distribution charges, trail commission are paid to the intermediaries by the asset management companies from investors’ money. This shaves a fraction off the returns investors earn.
On the other hand, direct MF plans don’t involve intermediaries. Hence, the expense ratio which includes all fees, commission, and fund management charges is lower, making the return higher than that of regular MF plans.
