SEBI: Direct plans to be shown first on mutual fund apps and websites from November 1

The Securities and Exchange Board of India (SEBI) has taken a decision that will affect the pocket of mutual fund investors. The new rule comes into force on November 1, 2026, and under it the direct plan will appear as the first option.

So far, investors buying mutual funds online see two options, direct and regular. On apps, however, the regular plan is often pre-selected. New investors therefore end up choosing it without realising, and a little more of their money is deducted.

As per SEBI, this will change from November 1, 2026. Asset management companies (AMCs) will have to show the direct plan as the main option on their websites and mobile apps. In other words, the direct plan will appear as the default.

Many people wonder what the difference between direct and regular plans is. Put simply, the fund is the same in both, the fund manager is the same, and the money is invested in the same place. The only difference is the commission.

A regular plan is bought through an agent. The agent has to be paid a commission by the company, and that commission comes out of the investor's own money. A direct plan has no agent in between. The investor buys the fund directly from the company, so no commission has to be paid and the cost automatically comes down.

Every mutual fund company charges some annual cost, called the expense ratio. In regular plans this cost is higher because of the commission, roughly 1.5% to 2%. In direct plans it is much lower, only 0.8% to 1%. A difference of 1% may not seem like much, but over the long term that 1% adds up to a great deal.

For example, if someone invests Rs 10 lakh for 10 years, a direct plan could yield Rs 1 lakh to Rs 2 lakh more than a regular plan. The lower cost raises returns and gives a greater benefit of compounding.

From November 1, the direct plan will be the first option on the official apps of large companies such as SBI Mutual Fund, HDFC, ICICI and Nippon.

An investor who wants a regular plan on someone's advice will have to select it deliberately. This will bring transparency, and investors will understand which plan they are putting money into and what it costs them.

The rule applies only to the companies' own platforms. What will happen on other third-party apps is yet to be known. On the whole, SEBI's decision benefits the ordinary investor and saves money. Those planning a fresh investment should therefore consider the direct plan after November 1.