Fin opens a fund house app to start his SIP and finds it has already picked the “direct plan” for him. Kosh explains SEBI’s new default, why direct and regular are the same fund at different prices, and what to do about old SIPs. Watch the reel, then read the full breakdown.
Tap play, sound on. Transcript below.
What changed on 1 November 2026?
SEBI chairman Tuhin Kanta Pandey announced on 28 October that from 1 November, direct plans are the default option on fund houses’ own websites and apps. Regular plans have not gone away: you can still choose one, but you must be told that it costs more.
This covers buying on an AMC’s (fund house’s) own digital platform. Old investments and running SIPs are not changed automatically.
Direct vs regular: what’s actually different?
Every mutual fund scheme comes in two versions. They hold the same shares and bonds and are run by the same fund manager. The only difference is the yearly cost, called the expense ratio, which is taken out of the fund’s value every day.
| Direct plan | Regular plan | |
|---|---|---|
| Fund manager and portfolio | Same | Same |
| Distributor commission | None | Included |
| Expense ratio | Lower | Higher |
| How you buy | Fund house website or app, or a platform offering direct plans | Through a distributor, agent or bank |
| How to spot it | “Direct” in the scheme name | “Regular” in the scheme name |
How much does the gap cost?
The gap between the two expense ratios is different for every fund, so check the scheme’s factsheet. As an example, if the gap is 0.5% a year:
| Amount invested | Extra cost of the regular plan each year (0.5% gap) |
|---|---|
| ₹1 lakh | ₹500 |
| ₹5 lakh | ₹2,500 |
| ₹10 lakh | ₹5,000 |
And it repeats every year on a growing amount, so over 15 or 20 years of SIPs the difference adds up to lakhs. These are simple examples, not a prediction of returns.
Should you switch your old regular SIPs?
- Nothing happens on its own. Your existing regular units and SIPs stay as they are.
- Switching means selling. Regular units are redeemed and direct units bought, so capital gains tax and an exit load may apply. Units held longer, or sold within the yearly long-term gains exemption, may cost little or nothing to switch.
- A simple start: keep old units for now and point new SIP instalments to the direct plan of the same fund.
- Value real advice. If someone genuinely helps you pick funds and stay on track, the commission pays for that. Just make it a choice, not an accident.
Open your mutual fund statement and look for “Direct” or “Regular” in each scheme name. Pay commission only for help you actually use.
See how much regular saving can grow.
Related reads: Ep 10: build an emergency fund first, Ep 9: muhurat trading and Ep 8: listing gains and tax on Koshfin. More tools on our tools page.
Education, not investment advice. Mutual fund investments are subject to market risks; read all scheme-related documents carefully. Rules can change; check SEBI’s and your fund house’s latest notices.
Reel transcript
Read what Kosh and Fin say
Fin: Kosh! I opened a fund house app for my SIP, and it picked the direct plan by itself!
Kosh: That’s new. From 1 November, SEBI made direct plans the default on fund houses’ own websites and apps.
Fin: Direct, regular… are they different funds? Which one is better?
Kosh: Same fund, same manager, same shares. Regular just costs more, because it includes a commission for the agent or distributor.
Fin: Wait, how much more are we talking?
Kosh: It differs by fund. If the gap is 0.5% a year on ₹5 lakh, that’s ₹2,500 a year, every year.
Fin: My old SIPs are all regular. Should I switch everything today?
Kosh: Not blindly. Old SIPs don’t change by themselves, and switching means selling, so check tax and exit load first.
Kosh: Kosh’s rule: same fund, lower cost. Know your plan.
Frequently asked questions
What changed for mutual fund investors on 1 November 2026?
SEBI made direct plans the default option on mutual fund houses’ (AMCs’) own websites and apps. SEBI chairman Tuhin Kanta Pandey announced it on 28 October 2026. If you pick a regular plan there, you must be told that it has a higher expense ratio.
Is a direct plan a different fund from the regular plan?
No. Both are versions of the same scheme: same fund manager, same portfolio. The only difference is cost. The regular plan includes a commission for the distributor or agent, so its expense ratio is higher and its NAV grows a little slower.
Will my existing regular SIPs move to direct automatically?
No. Existing investments and SIPs stay as they are. Moving to direct counts as a switch: your regular units are sold and direct units are bought, which can mean capital gains tax and an exit load.
Should everyone choose direct plans?
Not necessarily. If you pick funds and review them yourself, direct plans cost less. If a distributor or adviser genuinely helps you choose, stay invested and rebalance, the commission in a regular plan is what pays for that help. Just know which one you are paying for.
Part of our Kosh & Fin visual stories. New ones every week on Instagram: @kosh_fin