Converting a regular mutual fund to a direct plan: There are two types of plans: regular and direct. The regular plan is made up of commission fees paid to brokers and other intermediaries. These commission fees are not applicable to the direct plan. As a result, the most important reason to convert a regular fund to a direct fund is to save money on commissions. Whether an investor chooses a regular or a direct plan, he or she will receive the same mutual fund scheme managed by the same fund manager and investing in the same set of stocks and bonds. The difference, however, is in the expense ratios. In this article, we will look at why investors want to convert traditional mutual funds to ETFs.
Direct and regular plans are two ways to purchase the same mutual fund scheme. A direct plan entails purchasing a mutual fund scheme directly from the fund house or asset management firm. As a result, there will be no involvement of an agent or intermediary in the investing process.
A regular plan, on the other hand, is when you invest in a mutual fund scheme with the assistance of an intermediary or agent. Because the agent provided you with the services in this case, you must pay the commission costs. The investor pays a commission to the fund house or AMC when investing through regular plans. This fund house later pays the required amount to the intermediary.
This is the only significant distinction between these two plans. Investors incur higher expenses in a regular plan. This has an effect on the long-term returns. As a result, the returns generated by direct plans are higher than those generated by regular plans.
The commission is added to the investment balance in direct plans, lowering the expense ratio of your mutual fund scheme. As a result, the long-term returns are increased.
Know How to Convert a Regular Mutual Fund to a Direct Plan.
Before converting from a regular fund to a mutual fund direction, investors should be aware that for most funds, this will be considered a redemption from the regular plan. The method and the
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