The simplest extra return you can earn

A quick follow-up to what I was trying to drive home in the Fund Advisor Live session on December 6: over long periods, small cost differences do not stay small.

A viewer, Venkia, made a useful suggestion. Instead of using a hypothetical 12 per cent versus 11 per cent example, why not show a real direct versus regular comparison for the same fund, starting from January 2013, when direct plans began?

So, we ran exactly that exercise across a large set of funds using a Rs 25,000 SIP for 10 years (as of November 26, 2025).

Here is the punchline, in plain English. For the median fund, the direct plan ends up roughly 6.5 per cent ahead after 10 years. That works out to about Rs 4.5 lakh more corpus on the very same SIP, in the very same scheme, simply because you paid less every year.

The outliers are even more instructive. Take Tata Digital India Fund. The direct plan ends up about 10.6 per cent higher than the regular plan over the same 10-year period. That is a gap of roughly Rs 8.4 lakh. Nothing fancy happened. The market didn’t change. The fund didn’t change. Only the cost did.

Now, assume that the same SIP returns persist for 30 years. What looks like a modest gap at 10 years can translate into crores over a full investing lifetime. In the Tata Digital India example, that gap could be about Rs 26 crore on the same SIP.

This is what most investors miss. A small return leak does not hit you once. It hits every instalment and compounding does the rest. The damage becomes obvious only in the later years.

One important nuance: this isn’t an argument against advice. Good advice is not ‘a cost’ — it’s a value-add if it helps you choose the right fund, the right allocation and stick with it when it’s hardest to do so.

And that’s exactly why Value Research Fund Advisor's default is: advice + lower-cost direct plans. We don’t treat ‘direct vs regular’ as a philosophical debate — we treat it as a simple investor advantage that should be captured by default, unless there’s a very specific reason not to.

The takeaway is straightforward: if you’re paying for distribution/advice, make sure you’re also not silently paying away your compounding through higher ongoing costs.

Also read: Messy portfolios. Quiet compounding.