Equity mutual funds have demonstrated remarkable growth over the past decade, achieving a compounded average growth rate (CAGR) of around 13% under Regular Plans. According to reports from Essential Business Intelligence, this performance has significantly contributed to the substantial increase in mutual fund inflows by individual investors, including retail and high net worth individuals, across all scheme types, particularly in equity-oriented schemes. The total folio count has reached 27.53 crore as of April 2026, with individual investors comprising approximately 91% of all active folios. Notably, while the Top 30 cities remain the primary contributors to the Indian mutual fund industry's Assets Under Management (AUM), participation from beyond the top 30 locations, referred to as the B30, is also increasing, mainly in equity-oriented schemes. However, data from the Association of Mutual Funds in India (AMFI) reveals that individual investors invest through distributors who offer the Regular Plan rather than the Direct Plan.
Despite the strong market performance, individual investors continue to invest through distributors who offer Regular Plans rather than the Direct Plan. As reported by Essential Business Intelligence, when investors choose the Regular Plan, they pay a higher expense ratio due to distributor commissions that fund houses levy to cover distribution costs including incentivizing intermediaries. Most distributors, brokers, relationship managers at banks, and agents place their clients' investments under the Regular Plan since they assist with investment processes such as submitting KYC documents, application forms, generating account statements, and placing redemption requests. The fund house or asset management company pays regular commissions to these intermediaries from the higher expense ratio levied on investors under the Regular Plan. For these services, the higher expense ratio on the Regular Plan weighs on the investor's return, with no free lunches for investors.
The Securities and Exchange Board of India (SEBI) introduced the Direct Plan for mutual funds in 2013, making it mandatory for all mutual fund houses to offer this plan for all their schemes. According to Essential Business Intelligence, the Direct Plan has a noticeably lower expense ratio since there are no intermediaries involved, and mutual fund houses or asset management companies do not incur distribution expenses. The HDFC Flexi Cap fund, a popular diversified equity mutual fund scheme with an AUM of over ₹1 lakh crore as of April 2026, demonstrates this impact with an expense ratio of 1.27% under the Regular Plan versus 0.67% under the Direct Plan. For a ₹10 lakh investment with a 25-year horizon assuming a 12% CAGR, the Direct Plan builds a corpus of around ₹1.46 crore, while the Regular Plan generates approximately ₹1.28 crore, representing a remarkable difference of ₹18.49 lakh. The lower expense ratio under the Direct Plan makes a huge difference in the corpus you can build over the long term, even if it had been a 0.5% difference in expense ratio between the Direct Plan and the Regular Plan, assuming a 12% CAGR over 25 years. Recent data shows that direct plan execution alone saves 0.5 to 1.5% annually, often paying for any advisory subscription many times over.
Mutual fund advisory services in India 2026 have evolved beyond traditional distributor relationships toward integrated SEBI registered platforms that combine direct plan execution with research-backed personalised advice. According to recent reports, quality mutual fund advisory typically adds 1.5 to 3% annually in net returns through behavioural coaching during corrections, tax efficiency, direct plan savings, and timely rebalancing. The advisory market itself is fragmented across commissioned distributors, fee-only advisors, robo advisors and integrated platforms, with SEBI registered mutual fund advisory services offering the most comprehensive solutions. These platforms operate as SEBI registered entities with full regulatory compliance, offering direct plan execution that saves 0.5 to 1.5% annually, in-house research teams tracking over 1,500 schemes across 44 AMCs, and personalised recommendations aligned to investor goals, age, income, risk profile and existing portfolio. The integrated approach combines the cost advantages of direct plans with the unbiased advice of fee-only RIAs, providing the modern standard for retail mutual fund advisory.
