Direct plans do make a difference

It has been a good six years since SEBI gave mutual fund investors an option to go direct and skip distributor services in mutual funds. So have you been wondering what difference direct plans, with their lower expense ratios, have made to investor returns? We took stock of the five-year returns on key categories of mutual funds to find out. When looking at this data, it is important to bear in mind that the last few years have been exceptional, with equity SIPs generating returns that are quite low. Markets behave erratically, and even the best of investments can produce unremarkable returns in the short term. Despite this, the difference between the returns of direct and regular plans has still been around 1 per cent, which is not bad at all. Compounded over time, even this one percent is quite significant, making the decision to go for direct plans worthwhile. The table below captures the difference between the SIP returns of direct and regular plans over t