Listen to this article Click here to playThe Securities and Exchange Board of India (SEBI) will make direct mutual fund plans the default option on asset management companies’ (AMCs) digital platforms from November 1, 2026, SEBI Chairman Tuhin Kanta Pandey announced at NDTV Profit Ignite.
Direct and regular plans invest in the same mutual fund scheme and follow the same portfolio strategy.
However, direct plans do not carry distributor commissions, resulting in lower expense ratios than their regular counterparts.
It does not mean that regular plans will be discontinued, or that investors will no longer be able to invest through mutual fund distributors.
The default setting changes the starting point on AMC digital platforms, but it does not eliminate the investor’s choice between direct and regular plans.
Listen to this article Click here to play
The Securities and Exchange Board of India (SEBI) will make direct mutual fund plans the default option on asset management companies’ (AMCs) digital platforms from November 1, 2026, SEBI Chairman Tuhin Kanta Pandey announced at NDTV Profit Ignite.
Investors who choose regular plans will have to be informed about their higher expense ratios, bringing the cost difference between the two options into sharper focus.
Direct and regular plans invest in the same mutual fund scheme and follow the same portfolio strategy. However, direct plans do not carry distributor commissions, resulting in lower expense ratios than their regular counterparts.
The move is aimed at making investors more aware of the costs associated with their investment choices. It does not mean that regular plans will be discontinued, or that investors will no longer be able to invest through mutual fund distributors.
The change could, however, make the distinction between the two options more prominent at the point of investment, particularly for investors using AMC websites and digital platforms.
For mutual fund distributors (MFDs), the development puts the spotlight on how they communicate the value of their services to investors. While direct plans offer a lower-cost route for investors who do not require distribution assistance, regular plans provide access to distributor-led services, including investment guidance, transaction assistance and ongoing support.
The impact on distributors will depend on how AMCs implement the default setting, how prominently the regular-plan option is presented and how investors respond to the revised disclosure requirements.
Pandey has emphasised that easier access to financial products must be accompanied by a better understanding of what investors are buying, the costs involved and the risks they are taking.
For the distribution industry, the key question is whether the change will lead investors to evaluate plans primarily on expense ratios or encourage them to make a more informed assessment of the services they need.
The default setting changes the starting point on AMC digital platforms, but it does not eliminate the investor’s choice between direct and regular plans.
