Direct Plans Now Default: Check Your SIP Cost in 10 Minutes

Quick Answer: From 1 November 2026, direct mutual fund plans are the default on asset management company (AMC) websites and apps. Direct and regular plans of the same scheme hold the same portfolio, but regular usually costs more because it includes distributor commission. Existing SIPs do not switch automatically, so check whether yours are direct or regular.

What changed on 1 November

Securities and Exchange Board of India (SEBI) Chair Tuhin Kanta Pandey announced the change on 28 October 2026 at NDTV Profit IGNITE in Mumbai, and it took effect on 1 November 2026. When you buy through a fund house's own website or app, the direct plan is now the starting selection. If you choose a regular plan instead, the platform must tell you that its expense ratio is higher. That is the point of the change: the cost gap is shown to you at the moment you buy, rather than buried in a long document. Two limits matter. First, the announcement covers AMC digital platforms — the fund houses' own websites and apps. It does not by itself establish the same default on every bank app, distributor portal, or broker platform. Second, as of 30 October, no separate public circular setting out the exact disclosure format had been independently located, so check how your own AMC platform presents the choice before you act.

Direct vs regular: same fund, different cost

Direct and regular plans are not different funds. They invest in the same scheme, follow the same strategy, and are managed by the same fund manager. The difference is distribution. A regular plan is sold through a distributor, and the distributor's commission sits inside the plan's total expense ratio (TER). A direct plan is bought straight from the fund house, with no distributor commission, so its TER is generally lower. Over years, even a small annual cost gap compounds, because every rupee paid in charges is a rupee that stops compounding for you. That does not make regular plans wrong. A distributor may help with fund selection, paperwork, and reviews. The question is whether you are paying for help you actually use — and whether you knew you were paying for it.

What a 1% cost gap can do over 20 years

Take a simple illustration, not a forecast. Suppose you invest ₹10,000 a month, the fund earns 12% a year before expenses, a direct plan charges 0.50% a year, and a regular plan charges 1.50% a year. Net returns are then 11.50% and 10.50% a year. After 20 years, the direct illustration reaches about ₹92,51,011, while the regular illustration reaches about ₹81,05,049 — a gap of about ₹11,45,962 on ₹24,00,000 invested. After 10 years, the same illustration gives about ₹22,34,032 versus about ₹21,08,148. These are assumed figures, worked to show how compounding magnifies a cost gap. Actual returns, TERs, and outcomes will differ by scheme and market conditions, and past or illustrated returns are never a promise of future returns.

How to check your own SIP in 10 minutes

Step 1: Open your Consolidated Account Statement (CAS). You can request it from CAMS or KFintech, or through NSDL or CDSL, and it lists your mutual fund holdings across fund houses. Step 2: Look at each holding's plan name. It will usually say "Direct" or "Regular" alongside the scheme name, option, and folio number. If you cannot find the word, check the scheme's factsheet or your AMC statement for the same folio. Step 3: Compare the TER. For the same scheme, note the direct plan's TER and the regular plan's TER side by side. The gap, in percentage points, is the annual cost difference you are paying for distribution. Step 4: Write down what you find — scheme, plan type, monthly amount, and TER — before changing anything. A five-minute note stops a hurried switch based on a half-remembered holding.

Switching: check these four things first

Switching an existing investment is not the same as choosing a plan for fresh money. A switch is normally treated as a redemption from the old plan and a purchase into the new one, so check the tax and exit-load consequences for your own holding before you act. First, check exit load: some schemes charge if you exit within a set period. Second, check capital gains tax on the redemption, which depends on the fund type and your holding period. Third, check lock-ins, such as the three-year lock-in on ELSS tax-saving funds. Fourth, check whether your SIP instruction itself needs to be stopped and restarted, since an existing SIP does not convert on its own. If any of those checks is unclear, pause and confirm it with the AMC or a SEBI-registered investment adviser before instructing a switch. A switch done to save costs should not create a surprise tax bill.

When a regular plan can still make sense

Direct is the new default, not a rule that everyone must follow. If a distributor genuinely helps you choose funds, stay invested during falls, and review your portfolio, that service has value, and you may decide the higher TER is worth it. The honest test is simple: can you name what your distributor does for you, and would you pay that amount separately for it? If the answer is yes, regular is a deliberate choice. If you did not know you were in a regular plan at all, the new default has already done its job — it made the cost visible.

Educational content only — not financial advice. Consult a SEBI-registered investment adviser for personal guidance; investments are subject to market risk. Sources: Moneycontrol, 28 October 2026 (SEBI announcement at NDTV Profit IGNITE); Business Standard, 2 November 2026 (November money changes round-up); IndMoney, 29 October 2026 (scope and no-auto-conversion analysis, noting no separate public circular located as of 30 October).