The ₹1.6 Lakh Crore Case for Direct Mutual Funds

Consider a fund with an expense ratio of 1.5% for the regular plan versus 0.5% for the direct plan. On a ₹10 lakh investment earning 12% annually over 20 years, the direct plan would end up roughly ₹8 lakh ahead. That gap widens with larger sums and longer horizons.

Kamath pointed out that many direct MF platforms that existed when Coin launched have since disappeared or pivoted. “Some of the remaining platforms are also reassessing their business models,” he wrote. Coin, he said, now holds nearly ₹1.6 lakh crores in direct mutual fund AUM, making it the largest such platform in India. “At Zerodha, we will continue to offer direct mutual funds for free,” he wrote.

For investors weighing a switch from regular to direct plans, the math is straightforward: lower expense ratio means higher net returns. The switch is not automatic. Exit loads, tax implications, and the hassle of moving accumulated units all factor in. Most financial advisors suggest reviewing the portfolio once a year and making the switch when the cost benefit exceeds the friction.

Kamath closed his post with a broader message. “A lot of investors still don't know the difference between direct and regular plans,” he wrote. He urged investors to understand the difference and review their portfolios. The post is a reminder that the simplest change an investor can make – choosing a direct plan over a regular one – often has the biggest impact on long-term returns. The numbers are clear. The hurdle is not complexity; it is awareness.