Indian investors were scheduled to see lower-cost direct plans become the default on digital platforms of asset management companies (AMCs) from Nov. 1, Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey said. Pandey described the plan at NDTV Profit Ignite on Oct. 28, saying investors who select regular plans must be informed that their expense ratios are higher.
Direct and regular versions of a scheme have the same portfolio and fund manager, according to the Association of Mutual Funds in India (AMFI). Direct plans have lower expenses because they exclude distributor or agent costs, while regular plans include distribution-related expenses. The fee difference applies within the same scheme and manager.
Under Pandey’s remarks, investors could still select regular plans, but would have to be told about their higher expense ratios. That requirement links the platform’s default option with disclosure of the cost difference. AMFI says direct plans may not suit people who need help selecting a scheme or making investment decisions.
NDTV Profit’s Nov. 2 illustration estimated a gap of about ₹6 lakh for a ₹5,000 monthly systematic investment plan (SIP) over 20 years. It projected an ending value of about ₹49.5 lakh for a direct plan and ₹43.5 lakh for a regular plan, with total contributions of ₹12 lakh. The report assumed annual returns of 12% and 11%, respectively, for the two scenarios.
NDTV Profit described the projections as indicative, not guaranteed. It did not identify a specific scheme or state its direct-versus-regular expense-ratio gap, making the example a scenario rather than a standard savings amount. The comparison relies on different assumed returns, rather than reported fees for a named fund.
Pandey also cautioned about the limits of digital access. NDTV’s coverage of Pandey’s remarks quoted him saying, “Easy access does not guarantee understanding.”
