India' Best Funds 2025

The mutual fund industry is growing by leaps and bounds. However, to truly benefit from this growth, it is essential to identify the winners

- KUNDAN KISHORE

Choose Right To Ride The MF Growth Wave

As the mutual fund industry expands rapidly, so do investors' expectations. They now want optimal returns, and the industry is responding by offering a plethora of options in terms of product offerings.

While more options mean more opportunities, they can also make decision-making that much difficult. Two critical choices now dominate every investor's mind—choosing between active and passive, and between direct and regular plans.

Both choices boil down to one key question: which option gives you better returns? Let's find out more.

Direct Vs Regular Plans:

In a direct plan, you invest directly with the fund house without going through a distributor or advisor. This means that the fund house doesn't incur distribution costs, and the savings are passed on to you in the form of a lower expense ratio and, ultimately, higher returns. Regular plans, by contrast, are sold through intermediaries who earn commissions, which lead to a higher expense ratio and lower returns for the investor.

But do direct plans really offer higher returns than regular plans?

We ran two sets of numbers—one with a fund with a higher assets under management (AUM) and the other with a fund with a lower AUM, given that funds with higher AUM, typically, have a lower expense ratio compared with those with a lower AUM.