Sebi: Direct plans to appear first on mutual fund apps and sites from November 1

Some significant changes to mutual fund rules will take effect from November 1, 2026. Sebi chairman Tuhin Kanta Pandey gave clear details of the changes at an event.

Under the new arrangement, mutual fund companies will have to keep direct plans as the default option on their digital platforms. In simple terms, whenever an investor goes to an app or website to invest, direct plans will be the first thing shown.

If an investor still opts for a regular plan, they will be told directly whether that plan is costlier than the direct plan. The difference in cost between the two will thus be in front of the investor before they choose.

The difference between direct and regular plans is this: an investor in a mutual fund can pick either. In a direct plan, the investment is made directly with the mutual fund company. No agent or distributor is involved, so no commission is paid and the commission amount is saved.

In a regular plan, the investment is made through an agent or distributor. Because of the agent's commission, the expense ratio of this plan is somewhat higher.

The expense ratio is the amount or charge that mutual fund companies levy for handling and managing an investor's money. It therefore has a direct bearing on the fund's returns. Those who choose a direct plan have to make investment decisions themselves, while in a regular plan they have to take the advice of an agent or distributor.

Sebi has taken the step so that investors get a clear and complete picture of costs and can make informed decisions. It remains to be seen how much, and in what ways, investors actually benefit from the change.