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Earn More from Direct Plans

The returns earned from a fund's direct plan will be higher than the regular plan because of lower expenses

I had purchased Mirae Asset India Opportunities Fund through the Direct mode and invested in the dividend payout option. I find that there is a difference of nearly ₹4 in the NAV between direct and regular plan, the NAV on direct plan being higher. Accordingly I have been allotted units under Direct plan at a higher NAV than the Regular plan and consequently the number of units has been reduced. What is the advantage in applying for Direct plan instead of Regular plan? Which is beneficial for me as an investor?
- P. Mythili

You should not worry about the higher NAV at the time of investment. What matters is the returns that the Direct Plan will make from here, compared to the Regular Plan. The returns from the Direct Plan are likely to be higher than the other plans because the Direct plans have a lower expense ratio. Direct Plans are essentially plans that cut out the commission paid to intermediaries who market the fund. They reduce the cost and pass on the benefit of low cost to investors in the form of higher NAV and returns. Investing directly is recommended only if you are sure on which fund to buy. If however, you need advisory services of a broker to manage your portfolio, you must select a Regular plan. Investing directly is beneficial but it also increases the back-end research work to be done by investor herself to select a good fund and review it from time to time.

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