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Finance Sikh

By Ashish Malaviya · First published 4/11/2026

SEBI Makes Direct Mutual Fund Plans Default: What Investors in India Need to Know

From 1st November 2026, Direct Mutual Fund plans are the default option on AMCs' digital platforms. Learn what this means for investors in India.

As of 1st November 2026, Direct Mutual Fund plans are now the default option available on AMCs’ digital platforms. If you wish to invest in Regular Mutual Fund plans, you should be made aware of the higher expense ratios.

This doesn’t mean they’ve been banned, or that you’ll get better returns, it simply means that if you’re investing on an AMC’s digital platform you’ll see the Direct Mutual Fund option as the default. Here’s what you need to know as an investor.

What’s changed from 1st November?

The change was announced by SEBI Chairman Tuhin Kanta Pandey on 28th October. This means if you’re investing via a digital platform of an AMC (their website or app) you’ll see the Direct Plan as the default. You’ll still be able to invest in a Regular Plan, however you will need to be made aware of the higher expense ratio.

This announcement is regarding the digital platforms of AMCs. Not all banks, distributor apps or 3rd party platforms will need to change. However, do take note of which plan you’re viewing.

Direct Plan vs Regular Plan

Most Mutual Fund schemes will have both Direct and Regular options. These are both part of the same scheme, so will have the same underlying portfolio and fund manager. The key difference between them is how they’re distributed.

Direct Plan

A Direct Plan is bought directly from the Mutual Fund House. As you’re not paying any distributor fees this will normally have a lower expense ratio than the Regular Plan. This could be the right option for those who can understand the risk in the fund, pick the right schemes for them and keep track of their investments. However, they may also pay for professional advice separately.

Regular Plan

A Regular Plan is bought via a distributor/intermediary. As there are distribution fees involved this will generally have a higher expense ratio. This isn’t necessarily a bad thing. Some investors like having support with their transactions, understanding the products and having support during volatile times. Consider if you’re getting value for money.

What is the expense ratio?

The expense ratio is the amount of money charged regularly to manage your Mutual Fund scheme. This gets added to the Net Asset Value (NAV) of your scheme.

The lower the expense ratio the less of the scheme you’ll have to pay for. Over a long period this could mean you have more money invested into your scheme due to lower costs. If you’re earning the same pre-expense returns from both versions of the fund, then the Direct Plan will generally have a higher net return due to the low expense ratio.

This doesn’t guarantee a better investment. Both schemes will have the same risks. However, the costs won’t help you avoid any drops in the market, poor asset allocation or wrong fund.

Is Direct always better?

No. Whilst having a lower expense ratio is an important factor to consider,

A Direct Plan may be suitable if you understand what fund category you’re investing in, know what the risk is, what the objective is, what the time frame is and what the asset allocation is. Also if you’re happy to review your investments.

A Regular Plan may be helpful if you need support with picking your funds. Make sure you understand how your distributor is being paid and what services they’re providing. Just because they’re charging a fee doesn’t mean they’ll give you good advice or better returns. Consider how much you can manage yourself and if you need the support.

What if I’m already invested in a Regular Plan?

You won’t automatically be switched to a Direct Plan. Regular Plans haven’t been removed. Don’t feel the need to switch.

However, switching to a Direct Plan is usually seen as a switch. This means you’ll have to redeem your units and purchase them again. This could mean you pay capital gain tax. You may also pay an exit load depending on your scheme and how long you’ve held the units.

Before switching consider:

If you have a large portfolio or complex tax situation you may want to speak to a qualified tax professional or appropriately registered investment adviser.

Things to check before investing

Make sure:

What does this mean for the Mutual Fund industry in India?

This puts more of a focus on showing the costs of your investment clearly. Having a default option can impact what you choose, especially if you’re new to investing in Mutual Funds and didn’t know there were two options. This means people who want to invest without using a distributor may not accidentally choose an option with a higher cost. It may also put more focus on asking your distributor what services they provide and how they charge.

However, just because it’s easier to access doesn’t mean you’ll understand how to invest. You will still need to understand the risks, diversification, costs, time frames and difference between execution and personal advice. Distributors may need to show the value they provide and AMCs should ensure they’re providing clear disclosures.

FAQs

  1. Are Regular Mutual Fund Plans no longer available from November 2026?
    No. They’re still available. However, Direct Mutual Fund Plans will now be the default option on AMCs’ digital platforms. You’ll need to be made aware of the higher expense ratios if you choose to invest in Regular Mutual Fund Plans.

  2. Will my current Regular plan automatically be switched to a Direct plan?
    No. You won’t be automatically switched. Take a look at your current holdings and consider the tax and exit load implications.

  3. Do Direct and Regular Plans invest in different stocks?
    No. Both the Direct and Regular options will have the same underlying portfolio and fund manager. The main difference is how they’re distributed and the expense ratios.

  4. Is a Direct Plan suitable for everyone?
    Not necessarily. It may be suitable for those who can pick and monitor their funds. However, if you need regular support you may appreciate the support from your distributor. Just make sure you understand the cost.

  5. Where can I find the expense ratio for a Mutual Fund?
    Check the scheme disclosures from the AMC. Also check the Total Expense Ratio information from AMFI. Compare the Direct and Regular options for the same scheme. Check the latest disclosure.

Conclusion

The change to having Direct Mutual Fund Plans as the default option is a reminder that costs are important. From 1st November 2026 you’re more likely to see the Direct Plans as the default option if you’re investing on an AMCs’ digital platforms. However, Regular Plans are still available with a higher expense ratio disclosure.

Don’t just switch or invest because it’s the default option. Make sure you understand the costs, what support you’re getting, what the risk is in the fund and if you can manage your investment. An appropriate investment decision is one that suits your financial goals and behaviours.

Disclaimer: This article is for educational purposes only. It shouldn’t be considered investment, legal or tax advice. Investing in Mutual Funds carries market risk. Make sure you read through all scheme related documents carefully. If you need advice please consult a qualified professional.

Sources

Educational information only. Verify current rules and consider qualified advice for personal decisions.