Why is the NAV for direct funds more than regular funds
As there are no commissions involved, so the expense ratio of direct plans is lower than regular plans. Because of this reason, the direct plan of a mutual fund scheme would report a higher NAV after considering all the expenses.
Why NAV of regular fund is less than direct fund?
The NAV of direct plans is higher than their regular counterpart because of their higher returns. As the operating expenses of the fund is reduced from its net AUM, the lower expense ratio of its direct plan results in higher NAVs.
What is the difference between NAV direct and regular?
Direct plans are directly offered by the fund houses whereas regular plans are bought through intermediaries or distributors like Independent financial advisers, banks or NBFCs. 2. Direct plans have no commissions and brokerage whereas for regular plans, commission or brokerage is paid to the intermediaries.
Why NAV is different for the same fund?
Both plans share the same portfolio but have different Net Asset Values (NAVs) because of different expense ratios. A part of your investment is paid to the distributors as commission by the AMC, which in turn reduces a regular plan’s NAV. Therefore, the returns from the two plans will also be different.
Why are direct funds better than regular funds?
Since there are no third party agents involved, there are no commissions and brokerage. Hence the expense ratio of a direct mutual fund is lower. Thus, the return is higher due to a lower expense ratio.
Which mutual fund is better direct or regular?
The direct plan of mutual funds gives higher returns than the regular funds as they do not include broker fees. Additionally, the returns keep compounding. A professional financial advisor can help you to understand and manage your funds more efficiently. You do not get a professional and personal advisory.
How do I change MF from regular to direct?
Visit the transaction page, where you can buy, change, or redeem your fund units. Select the ‘switch’ option and then click on the respective fund name. It will have a ‘Direct Plan’ option; click on it and follow the steps displayed. It will take about four working days to reflect the change.
Is direct plan better than regular plan?
NAV of direct plan is higher than regular plan because they save on commission. Direct plans have no commissions and brokerage whereas for regular plans, commission or brokerage is paid to the intermediaries.
What are the disadvantages of direct mutual funds?
The disadvantage of taking the direct route is that you have to make all your investment decisions and complete the formalities on your own. Since you are buying a direct plan directly from a mutual fund company, you don’t have access to a mutual fund advisor.
What is NAV in mutual fund?
NAV or Net Asset Value is the unit price of a mutual fund scheme. Mutual funds are bought or sold on the basis of NAV.
What are the advantages of direct mutual funds?
Benefits of Investing in Direct Mutual Funds
Investor directly purchases the fund units from the fund house without any 3rd party involved. Direct schemes have lower expense ratio as compared to regular schemes, which helps the investor earn higher returns in the longer run.