Why NAV of Direct Plan is Higher Than Regular Plan
Why NAV of Direct Plan is Higher Than Regular Plan?
Understand the real difference and what it means for your investments
By WealthCare Vest — Caring for your wealth, strengthening your investment
📌 Introduction
Have you ever noticed that the Net Asset Value (NAV) of a Direct Mutual Fund Plan is higher than that of a Regular Mutual Fund Plan?
Many investors get confused seeing this difference and often believe that the higher NAV means better returns. In this blog by WealthCare Vest, we simplify the concept and help you understand why this happens, what it really means, and whether it should impact your investment decision.
🔍 What is NAV in Mutual Funds?
NAV (Net Asset Value) is the market value of one unit of a mutual fund. It is calculated as:
📊
NAV = (Total Assets – Expenses) / Total Number of Units
A higher NAV doesn’t mean the fund is better or worse. It just reflects the fund’s current valuation.
💡 Direct Plan vs Regular Plan – What’s the Key Difference?
| Criteria | Direct Plan | Regular Plan |
|---|---|---|
| Intermediary Involved | No | Yes (Distributor/MFD/Advisor) |
| Commission Charges | None | Yes, included in fund expense |
| NAV | Higher | Lower |
| Returns | Slightly higher | Slightly lower |
| Guidance | Self-managed | Expert support provided |
In Direct Plans, you invest directly through the AMC (Asset Management Company) without any intermediaries.
In Regular Plans, you invest through a Mutual Fund Distributor (MFD) or advisor, and a commission is paid to them from the fund’s expense ratio.
📉 Why is NAV Lower in Regular Plan?
Because the distributor’s commission is included in the expense ratio of the Regular Plan, the overall expenses are higher. After deducting these expenses, the NAV comes out slightly lower.
This is the only reason why Direct Plan NAV is higher — not because the fund is different. Both plans invest in the same underlying securities.
✅ Does it Really Matter Which Plan You Choose?
Let’s break the myth:
If a Direct Plan gives 12% returns, the Regular Plan might give 11.5% to 11.7% returns — a minor difference in long-term wealth.
But here’s what you get with the Regular Plan:
-
Expert human guidance
-
Portfolio rebalancing suggestions
-
Time savings
-
Help in tax-saving, asset allocation, goal planning
So, if you’re someone who values personalized advice and time savings, the slight difference in returns might be worth it.
📊 Example to Understand Better
Let’s assume you invest ₹1,00,000 for 10 years:
| Plan Type | Annual Return | Corpus After 10 Years |
|---|---|---|
| Direct Plan | 12% | ₹3,10,585 |
| Regular Plan | 11.5% | ₹2,97,128 |
| Difference | — | ₹13,457 |
This difference may seem significant, but if you used expert guidance in Regular Plan to earn more from other sources or avoided poor investments, the trade-off might be beneficial.
🤝 WealthCare Vest's Advice
At WealthCare Vest, we believe in empowered investing. Whether you go for Direct or Regular, the key is to stay disciplined, consistent, and goal-oriented.
If you’re confident doing research on your own, a Direct Plan is great.
If you want assistance, strategy, and ongoing support, a Regular Plan with a trusted advisor is the smarter choice.
📌 Disclaimer
Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully before investing. This blog is for educational purposes only and does not constitute financial advice. Always consult a SEBI-registered advisor before making investment decisions.
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🔖 Labels
Mutual Funds, NAV, Direct Plan, Regular Plan, Investment Tips, WealthCare Vest
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