I have two questions. One is, on all websites, there are two variants of every fund. For example, HDFC Fund and HDFC Direct Fund. So are they both same? And I am a new investor. I have Aditya Birla Sun Life Tax Relief, HDFC Taxsaver and HDFC Smallcap fund in my portfolio. The returns were good last year, but now the returns are negative from last five to six months. My horizon is of five to six years. What should I do?
Your second question is very important. Tax-saving funds have a lock-in of three years and you can't withdraw before that. Anyways, you should have at least this much horizon while investing in equity. The funds chosen by you are good. Continue to invest in them. Don't act on six months performance. Now answering your first query. There are two variants of mutual fund schemes: regular and direct. The regular plans are sold through mutual fund agents or distributors, for which they get a commission. That's why expenses of regular plans are higher. Expenses of a direct plan are less. Because of this reason, direct plans are able to give you 0.5 to 1 per cent better returns on an annual basis.
But to invest in direct plans, it is important that you are able to do everything on your own. You won't get anyone's help to invest. You will have to invest directly. You should invest directly, if you are able to choose the funds on your own, can invest confidently and regularly, and you don't need anyone's help when the market falls. Otherwise, go for the regular funds.