01 Jan Invest in direct mutual funds for higher returns
Invest in Direct Mutual Funds For Higher Returns
All mutual funds have two plans – Regular and Direct. Direct plans give higher returns every year because investors do not have to pay commissions. Despite this, nearly 90% of retail investors invest in Regular plan mainly due to lack of awareness. Investors can now transact in Direct plans through platforms such as ORO.
What are direct plans in Mutual funds?
|Mutual Fund Scheme||Expense ratio of direct plan||Expense ratio of regular plan||Difference between regular and direct plan||Discount on the direct plan|
|Indiabulls Blue Chip Fund||0.22%||2.47%||2.25||91%|
|Taurus Bonanza Fund||0.66%||2.7%||2.04||76%|
|Franklin India Multi – Asset Solution Fund||0.1%||1.90%||1.80||95%|
|ICICI Prudential Balanced Advantage Fund||0.63%||2.24%||1.61||72%|
|HDFC Small and Mid Cap Fund||1.23%||2.48%||1.25||50%|
Does the difference in expense ratio matter?
|Year||Growth in investment with direct plan||Growth in investment with regular plan||Extra earnings with the direct plan|
|Initial Investment amount||10,00,000||10,00,000|
|Returns||10% – 1% = 9%||10% – 2% = 8%|
|Year 1||=10,00,000*(1+9%)= 10,90,000||=10,00,000*(1+8%)= 10,80,000||10,000|
Maybe I am already buying direct plans?
Investing in India is all set to change with ORO (www.orowealth.com) – India’s first direct funds platform. For the first time ever retail investors can transact in direct plans with the same convenience and level of service as standard plans. For investors looking to further enhance returns with financial advice, ORO also has an online fee-based advisory platform. Invest with ORO and experience the difference that truly low cost investing and unbiased, good quality advice can make to your returns.