Switching from Regular to Direct Mutual Funds Calculator

Using the Switch Cost Calculator

Switching triggers a taxable event — LTCG (12.5%) if held over 1 year, STCG (20%) if under. Some funds also levy an exit load of 0.5–2% for early redemption. The calculator below factors in both.

How to Make the Switch

Your ARN (distributor code) is removed from the folio when you place a switch request. The folio continues — same units, same ISIN, same NAV growth from that point. The fund manager does not change. Your historical SIP record stays intact. What changes is the TER applied going forward: lower by the gap amount, meaning your NAV compounds faster.

For step-by-step instructions on the STP route vs. redeem-and-rebuy, see How to Switch from Regular to Direct Mutual Fund Plans.

What is a Direct vs Regular Mutual Fund?

Each mutual fund in India comes in two versions: Direct and Regular. Regular funds are those you buy through a distributor — a bank RM, a commission-based advisor, or an investment platform that earns a referral fee. These funds pay a commission to the distributor, typically around 0.2%–1.2% of your portfolio value per year. So if you invested ₹5 lakh, which has now grown to ₹10 lakh, your agent is earning approximately ₹10,000 every year from your investments. This commission is paid by the mutual fund company (the AMC) directly to the distributor.

If you were buying the exact same mutual fund directly — or through a fee-only advisor who charges no commissions — you would get the same fund but with higher returns. In the example above, your portfolio might instead be ₹10.70 lakh, roughly ₹70,000 more, because no commission was being deducted. These hidden commissions compound over time and reduce your realised returns.

To make this concrete, consider ICICI Prudential Small Cap Fund:

• Regular Plan expense ratio: 1.52%
• Direct Plan expense ratio: 0.76%

The underlying portfolio — the fund manager, the stocks held, the investment strategy — is identical. The only difference is 0.76% per year staying in your NAV instead of going to a distributor.

The Expense Ratio Drag — By Category

The TER gap varies significantly by fund category. Index funds have a narrow gap; actively managed small- and mid-cap funds have the widest gap.

Category	Avg Direct TER	Avg Regular TER	TER Gap
Nifty 50 Index	~0.20%	~0.50%	~0.30%
Large Cap (Active)	~0.70%	~1.60%	~0.90%
Flexi Cap	~0.75%	~1.75%	~1.00%
ELSS (Tax Saver)	~0.75%	~1.80%	~1.05%
Mid Cap	~0.65%	~1.85%	~1.20%
Small Cap	~0.70%	~1.95%	~1.25%

Source: AMFI fund data. TERs are indicative averages; individual funds vary.

Should You Move Your Regular Funds to Direct?

Commission income from regular funds supports the distributor. If you are getting good guidance on where to invest, when to rebalance, and how to plan your goals — and you find enough value in that advice — then staying with the distributor and paying the commission they earn is a fair exchange.

But if you feel you are not receiving any meaningful service from your distributor and are still invested in regular funds, you should seriously consider switching to the direct version of the same mutual fund.

If you'd rather have a fee-only advisor walk you through this — reviewing your specific folios, calculating the tax impact, and sequencing the switch for minimum tax drag — book a free portfolio audit with a Foliyo-vetted RIA.

How to Identify Regular Plans in Your CAS

Your Consolidated Account Statement (CAS), issued by CAMS or KFintech, lists every folio. Look at the scheme name:

• Regular plan scheme names typically include the word "Regular" or end in "-Reg-" or "-RP"
• Direct plan scheme names include "Direct" or "-Dir-" or "-DP"
• If you bought through a bank, a broker, or a physical distributor, you are almost certainly in Regular plans

A scheme like "Parag Parikh Flexi Cap Fund - Regular Plan - Growth" is a Regular plan. "Parag Parikh Flexi Cap Fund - Direct Plan - Growth" is the Direct version — same portfolio, same manager, lower TER.

You can download your CAS from MF Central or the CAMS/KFintech portals. Upload it to Foliyo and it will flag every Regular plan folio automatically.

FAQ

My RM says "Direct plans are risky because you have no advisor — Regular plans are managed." Is that true?

No. Both plan variants invest in exactly the same portfolio of securities. The only thing a Regular plan "manages" that a Direct plan does not is the commission payment to the distributor. The fund manager, investment process, and underlying holdings are identical. If the fund underperforms, it underperforms in both Regular and Direct equally. The risk profile is identical.

I have been in Regular plans for 8 years. Is it too late to switch?

It is never too late to stop paying unnecessary commissions. The question is whether to switch via STP (gradual, no immediate LTCG) or redeem-and-rebuy (fast, LTCG triggered). If your unrealised gains are large, the tax-efficient route is to use the STP method over 6–12 months. The Switch Cost Calculator above will show you the break-even.

Can I switch directly on CAMS or MF Central without going to my AMC?

Yes. MF Central (mfcentral.com) supports online switch requests across most AMCs — you can switch from Regular to Direct within the same folio without a distributor. Some AMCs also allow this on their own platforms (e.g., HDFC MF, ICICI Pru AMC, Mirae Asset). Zerodha Coin, Kuvera, and Groww also allow you to hold Direct plans. The process varies by AMC; the step-by-step guide covers each route.

What is an ARN code and do I need to remove it?

ARN (AMFI Registration Number) is the distributor's identifier attached to your folio. When you switch to Direct, the folio gets an "ARN-0" (direct) code. You do not need to separately "remove" the ARN — placing a switch request automatically changes the plan type and removes the distributor association. You do not need the distributor's permission to switch.

Want a fee-only SEBI RIA to model your full portfolio — including which funds to keep, which to consolidate, and what the LTCG harvesting opportunity is? Get a free portfolio audit →