Mutual Fund Expense Ratio Calculator – Direct vs Regular Plan Commission Drag

The Total Expense Ratio (TER) is the annual percentage fee charged by an Asset Management Company (AMC) to cover fund management, administrative expenses, marketing, and distributor commissions.

In a Regular Plan, the AMC pays an ongoing commission (0.5% to 1.5% annually) to the broker/distributor out of your investment. In a Direct Plan, there is zero distributor commission, leading to a lower expense ratio and higher Net Asset Value (NAV).

Because of compounding, a seemingly small 1% difference in expense ratio can eat up 20% to 25% of your total lifetime retirement wealth—equivalent to ₹20 Lakhs to ₹50 Lakhs in lost returns!

Yes! Direct and regular plans of a mutual fund hold the exact same portfolio of stocks and bonds and are managed by the exact same fund manager. The ONLY difference is the fee.

You can easily switch from regular to direct plans online through platforms like MF Central, CAMSKRA, Zerodha Coin, Groww, or directly on the AMC website.

Yes. Switching from a regular plan to a direct plan is treated as a redemption and repurchasing, which may trigger Capital Gains Tax and exit loads if switched before 1 year.

Yes. Under SEBI regulations, equity mutual fund expense ratios are capped on a sliding scale based on the fund’s Assets Under Management (AUM), starting at a maximum of 2.25% for small funds.

AMCs are mandated by SEBI to publish their daily Total Expense Ratio (TER) for both Direct and Regular plans on their websites and on the AMFI portal.