What are Direct Plans?
All mutual funds schemes come with two distinct plans — direct and regular plans. Except for their expense ratios, rest of the fund features like fund management, investment objectives, investment strategies, asset allocation strategy, benchmark indices, portfolio composition, etc remain the same for both direct and regular plans. Direct plans have lower expense ratios than their regular counterparts, which lead them to post higher returns than the regular ones. This makes direct plans a superior choice than regular plans.
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Here are the lists of top 10 direct mutual funds for each of the popular mutual fund categories.
Top 10 Direct Multicap Funds:
| Funds | Returns (%) | |||
| 1-Year | 3-Year | 5-Year | 7-Year | |
| Axis Multicap Fund | 19.95 | 16.07 | — | — |
| Kotak Standard Multicap Fund | 12.36 | 8.61 | 14.10 | 18.03 |
| SBI Magnum Multicap Fund | 14.30 | 6.98 | 12.75 | 17.86 |
| Motilal Oswal Multicap 35 Fund | 10.73 | 4.05 | 12.43 | — |
| Edelweiss Multicap Fund | 15.69 | 7.33 | 13.20 | — |
| ICICI Prudential Multicap Fund | 9.87 | 5.99 | 11.54 | 15.18 |
| Invesco India Multicap Fund | 19.92 | 4.27 | 11.66 | 18.52 |
| HDFC Equity Fund | 6.80 | 3.82 | 10.86 | 13.87 |
| Franklin India Equity Fund | 16.48 | 5.54 | 10.53 | 15.58 |
| Nippon India Multicap Fund
|
0.55 | 0.72 | 6.47 | 12.17 |
| Benchmark
(S&P BSE 500 TRI) |
17.70 | 8.16 | 12.98 | 14.38 |
| Multicap Fund Category average | 16.23 | 7.34 | 12.28 | 15.67 |
(Data as on December 30th, 2020: Source: Value Research)
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Top 10 Direct Large Cap Funds:
| Fund Name | Returns (%) | |||
| 1-Year | 3-Year | 5-Year | 7-Year | |
| Mirae Asset Large Cap Fund | 14.33 | 9.45 | 14.90 | 18.28 |
| Axis Bluechip Fund | 20.19 | 16.15 | 16.57 | 17.25 |
| ICICI Prudential Bluechip Fund | 13.14 | 8.02 | 13.03 | 14.83 |
| SBI Bluechip Fund | 16.30 | 8.38 | 12.34 | 16.37 |
| Nippon India Large Cap Fund | 5.25 | 4.87 | 10.87 | 15.02 |
| Franklin Bluechip | 14.31 | 5.75 | 10.12 | 12.71 |
| IDFC Large Cap | 17.97 | 8.58 | 13.33 | 12.90 |
| HDFC Top 100 | 6.10 | 5.16 | 11.13 | 13.05 |
| L&T India Large Cap | 13.21 | 8.72 | 11.39 | 13.94 |
| Invesco India Large Cap | 14.73 | 9.44 | 12.51 | 15.22 |
| Benchmark Index (S&P BSE 100 TRI) | 15.99 | 9.93 | 13.34 | 13.67 |
| Large Cap funds Category Average | 14.40 | 9.04 | 12.55 | 13.96 |
(Data as on 30th, 2020, Source- Value Research)
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Top 10 Direct ELSS (Equity Linked Savings Scheme) Funds
| Fund Name | Returns (%) | |||
| 1 year | 3 year | 5 year | 7 year | |
| Axis Long Term Equity | 20.45 | 13.34 | 15.37 | 20.59 |
| Mirae Asset Tax Saver | 22.93 | 12.26 | 19.93 | — |
| Invesco India Tax Plan | 19.87 | 10.21 | 14.34 | 18.49 |
| Aditya Birla Sun Life Tax Relief 96 | 15.89 | 5.74 | 12.45 | 17.40 |
| DSP Tax Saver | 15.61 | 7.82 | 14.26 | 17.69 |
| Kotak Tax Saver | 16.30 | 8.89 | 13.89 | 17.53 |
| ICICI Prudential Long Term Equity | 13.95 | 8.31 | 11.46 | 15.48 |
| Motilal Oswal Long Term Equity | 9.24 | 5.16 | 14.40 | — |
| Tata India Tax Savings | 12.85 | 6.60 | 13.16 | 17.85 |
| Nippon India Tax Saver | 0.01 | -6.40 | 4.99 | 12.61 |
| Benchmark
(S&P BSE 500 TRI) |
17.70 | 8.16 | 12.98 | 14.38 |
| ELSS Category Average | 16.87 | 6.49 | 12.40 | 15.75 |
(Data as on 30th, 2020: Source: Value Research)
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Top 10 Direct Midcap funds:
| Fund Name | Returns (%) | |||
| 1 year | 3 year | 5 year | 7 year | |
| Axis Midcap Fund | 27.21 | 14.54 | 16.19 | 21.54 |
| DSP Midcap Fund | 24.33 | 7.50 | 14.53 | 20.44 |
| Invesco India Midcap Fund | 26.12 | 8.55 | 14.22 | 20.95 |
| Tata Mid Cap Growth Fund | 25.74 | 5.95 | 12.13 | 20.17 |
| Nippon India Growth Fund | 22.52 | 5.72 | 12.48 | 17.00 |
| Kotak Emerging Equity Fund | 23.64 | 6.65 | 14.61 | 22.35 |
| L&T Midcap Fund | 20.36 | 2.56 | 13.00 | 20.89 |
| Edelweiss Midcap Fund | 28.02 | 5.32 | 13.00 | 21.04 |
| HDFC Midcap Opportunities Fund | 22.19 | 3.47 | 12.28 | 19.09 |
| Franklin India Prima Fund | 18.64 | 4.32 | 11.98 | 19.29 |
| Benchmark (S&P BSE 150 Midcap TRI) | 26.03 | 3.35 | 12.54 | 18.41 |
| Midcap Fund Category Average | 25.52 | 4.90 | 12.10 | 19.24 |
(Data as on December 30th, 2020: Source: Value Research)
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Top 10 Direct ‘Large and Midcap’ Funds:
| Fund Name | Returns (%) | |||
| 1 year | 3 year | 5 year | 7 year | |
| Mirae Asset Emerging Bluechip Fund | 23.36 | 10.90 | 18.38 | 25.84 |
| Invesco India Growth Opportunities Fund | 13.95 | 9.01 | 14.26 | 16.94 |
| Edelweiss Large and Midcap Fund | 18.13 | 9.40 | 13.14 | 15.94 |
| Kotak Equity Opportunities Fund | 17.65 | 8.75 | 14.42 | 17.46 |
| Tata Large and Midcap Fund | 14.62 | 8.48 | 12.13 | 16.20 |
| DSP Equity Opportunities Fund | 15.11 | 5.90 | 13.66 | 16.74 |
| ICICI Prudential Large and Midcap Fund | 12.43 | 4.39 | 10.76 | 12.86 |
| L&T Large and Midcap Fund | 15.36 | 3.54 | 10.95 | 14.75 |
| IDFC Core Equity Fund | 14.23 | 4.95 | 12.28 | 13.71 |
| Aditya Birla Sun Life Equity Advantage Fund | 18.89 | 4.56 | 12.63 | 17.44 |
| Benchmark (S&P BSE Large Mid Cap TRI) |
12.50 | 8.07 | 12.44 | 13.45 |
| ‘Large and Midcap’ Fund Category Average | 16.91 | 6.01 | 12.45 | 16.56 |
(Data as on December 30th, 2020; Source: Value Research)
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Top 10 Direct Small Cap funds:
| Fund Name | Returns (%) | |||
| 1 year | 3 year | 5 year | 7 year | |
| Axis Small Cap Fund | 24.54 | 11.47 | 15.42 | 22.85 |
| SBI Small Cap Fund | 35.23 | 5.70 | 17.13 | 28.37 |
| Nippon India Small Cap Fund | 29.99 | 2.48 | 13.74 | 23.59 |
| Kotak Small Cap Fund | 36.71 | 6.63 | 14.44 | 20.84 |
| HDFC Small Cap Fund | 21.89 | 1.23 | 12.46 | 16.82 |
| ICICI Prudential Small Cap Fund | 25.25 | 2.80 | 10.62 | 14.24 |
| DSP Small Cap Fund | 34.97 | 0.70 | 10.83 | 22.39 |
| L&T Emerging Business Fund | 16.88 | -1.92 | 12.05 | — |
| Franklin Smaller Companies Fund | 19.31 | -1.56 | 9.21 | 18.60 |
| Aditya Birla Sun Life Small Cap Fund | 21.57 | -5.31 | 8.46 | 16.22 |
| Benchmark | 28.24 | -3.72 | 7.78 | 13.18 |
| (S&P BSE 250 Small-Cap TRI) | ||||
| Small Cap Fund Category Average | 32.18 | 1.16 | 11.31 | 20.16 |
(Data as on December 30th, 2020; Source: Value Research)
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Top 10 Direct Value Funds:
| Fund Name | Return (%) | |||
| 1 year | 3 year | 5 year | 7 year | |
| UTI Value Opportunities Fund | 19.15 | 9.27 | 11.96 | 13.14 |
| ICICI Prudential Value Discovery Fund | 23.28 | 6.53 | 9.99 | 17.00 |
| Nippon India Value Fund | 16.27 | 4.60 | 10.84 | 15.95 |
| Tata Equity P/E Fund | 13.06 | 4.58 | 13.57 | 18.43 |
| HDFC Capital Builder Value Fund | 13.49 | 3.23 | 10.75 | 15.11 |
| L&T India Value Fund | 15.13 | 2.92 | 11.18 | 19.07 |
| Quantum Long term Equity Value Fund | 12.64 | 4.08 | 9.20 | 12.12 |
| Templeton India Value Fund | 12.63 | -0.18 | 8.75 | 12.73 |
| Indiabulls Value Fund | 16.53 | -0.40 | 7.55 | — |
| Aditya Birla Sun Life Pure Value Fund | 16.78 | -6.48 | 7.42 | 17.12 |
| Benchmark (S&P BSE 100 TRI) | 15.99 | 9.93 | 13.34 | 13.67 |
| Value Fund Category Average | 17.04 | 3.61 | 10.91 | 15.75 |
(Data as on December 30th, 2020; Source: Value Research)
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Top 10 Direct Contra Funds:
| Fund Name | Return (%) | |||
| 1 year | 3 year | 5 year | 7 year | |
| Invesco India Contra | 22.06 | 8.72 | 15.70 | 20.12 |
| Kotak India EQ Contra | 16.19 | 10.57 | 15.22 | 15.78 |
| SBI Contra Fund | 30.54 | 4.01 | 10.40 | 13.61 |
| Benchmark average
(S&P BSE 100 TRI) |
15.99 | 9.93 | 13.34 | 13.67 |
| Contra Fund Category Average | 17.04 | 3.61 | 10.91 | 15.75 |
(Data as on December 30th, 2020; Source: Value Research)
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Top 10 Direct International Funds:
| Fund Name | Returns (%) | |||
| 1 year | 3 year | 5 year | 7 year | |
| DSP Global Allocation Fund | 22.23 | 12.98 | 9.60 | – |
| Edelweiss Greater China Equity Off-shore Fund | 58.63 | 24.68 | 23.26 | 17.52 |
| Nippon India US Equity Opportunities Fund | 24.15 | 21.49 | 18.01 | – |
| ICICI Prudential US Bluechip Equity Fund | 19.53 | 19.68 | 17.16 | 14.39 |
| DSP US Flexible Equity Fund | 24.21 | 16.72 | 15.16 | 13.37 |
| Aditya Birla Sun Life International Equity Fund -Plan A | 13.66 | 14.38 | 10.72 | 8.05 |
| Edelweiss Emerging Markets Opportunities Fund | 22.84 | 13.19 | 15.82 | – |
| HSBC Global Consumer Opportunities Fund | 16.05 | 12.54 | 13.43 | – |
| Franklin Asian Equity Fund | 25.75 | 12.22 | 15.77 | 11.90 |
| Kotak Global Emerging Market Fund | 29.59 | 11.05 | 12.45 | 7.86 |
| Benchmark
(S&P BSE 100 TRI) |
17.70 | 8.16 | 12.98 | 14.38 |
(Data as on December 30th, 2020; Source: Value Research)
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Top 10 Direct Focused Funds
| Fund Name | Returns (%) | |||
| 1 year | 3 year | 5 year | 7 year | |
| IIFL Focused Equity Fund | 24.73 | 15.22 | 17.52 | — |
| IDFC Focused Equity Fund | 16.05 | 4.58 | 13.33 | 13.25 |
| Mirae Asset Focused Fund | 22.35 | — | — | — |
| L&T Focused Equity Fund | 14.25 | — | — | — |
| Principal Focused Multicap Fund | 19.22 | 10.42 | 13.44 | 15.45 |
| ICICI Prudential Focused Equity Fund | 26.35 | 7.95 | 11.99 | 13.18 |
| Motilal Oswal Focused 25 Fund | 17.77 | 10.90 | 14.01 | 16.97 |
| Axis Focused 25 Fund | 21.51 | 13.09 | 17.72 | 18.75 |
| SBI Focused Equity Fund | 15.57 | 9.65 | 14.85 | 18.77 |
| Sundaram Select Focus Fund | 12.03 | 10.33 | 13.32 | 13.73 |
(Data as on December 30th, 2020: Source: Value Research)
Top 10 Direct Ultra Short Duration Funds
| Fund Name | Returns (%) | |||
| 1 year | 3 year | 5 year | 7 year | |
| Aditya Birla Sun Life Savings Fund | 7.17 | 7.82 | 8.04 | 8.42 |
| ICICI Prudential Ultra Short Term Fund | 7.21 | 8.10 | 8.64 | 9.80 |
| HDFC Ultra Short Term Fund | 6.73 | — | — | — |
| SBI Magnum Ultra Short Duration Fund | 6.05 | 7.40 | 7.33 | 7.73 |
| IDFC Ultra Short Term Fund | 5.80 | — | — | — |
| Kotak Savings Fund | 6.32 | 7.44 | 7.59 | 8.08 |
| L&T Ultra Short Term Fund | 5.83 | 7.14 | 7.47 | 7.96 |
| Invesco India Ultra Short Term Fund | 5.78 | 7.24 | 7.75 | 8.32 |
| Axis Ultra Short Term Fund | 6.18 | — | — | — |
| Tata Ultra Short Term Fund | 5.69 | — | — | — |
| Ultra Short Duration Fund Category Average | 5.66 | 6.36 | 6.91 | 7.58 |
(Data as on December 30th, 2020; Source: Value Research)
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Top 10 Direct Corporate Bond Funds:
| Fund Name | Returns (%) | |||
| 1 year | 3 year | 5 year | 7 year | |
| L&T Triple Ace Bond Fund | 12.72 | 10.60 | 9.47 | 9.47 |
| Axis Corporate Debt Fund | 12.34 | 9.29 | — | — |
| HDFC Corporate Bond Fund | 12.07 | 9.67 | 9.27 | 9.45 |
| ABSL Corporate Bond Fund | 12.04 | 9.59 | 9.15 | 9.40 |
| ICICI Prudential Corporate Bond Fund | 10.82 | 9.23 | 8.90 | 9.14 |
| IDFC Corporate Bond Fund | 11.90 | 9.08 | — | — |
| Sundaram Corporate Bond Fund | 11.19 | 9.32 | 9.22 | 10.00 |
| Kotak Corporate Bond Fund | 10.00 | 9.21 | 8.89 | 9.37 |
| Invesco India Corporate Bond Fund | 10.58 | 8.87 | 8.77 | 8.68 |
| Edelweiss Corporate Bond Fund | 2.77 | 0.68 | 3.75 | — |
| Benchmark (NIFTY Corporate Bond TRI) | 7.42 | 7.30 | 7.22 | 7.81 |
| Corporate Bond Fund
Category Average |
10.41 | 8.42 | 8.39 | 9.11 |
(Data as on December 30th, 2020; Source: Value Research)
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Top 10 Direct Balanced Advantage/Dynamic Asset Allocation Funds
| Fund Name | Returns (%) | |||
| 1-year | 3-year | 5-year | 7-year | |
| Edelweiss Balanced Advantage Fund | 24.04 | 11.87 | 11.74 | 13.03 |
| L&T Balanced Advantage Fund | 13.95 | 9.32 | 8.82 | 13.43 |
| IDFC Dynamic Equity Fund | 13.93 | 8.99 | 10.01 | — |
| ICICI Prudential Balanced Advantage Fund | 11.81 | 8.97 | 11.25 | 13.27 |
| DSP Dynamic Asset Allocation Fund | 14.42 | 9.98 | 10.42 | — |
| Motilal Oswal Dynamic Fund | 9.82 | 7.31 | — | — |
| Aditya Birla Sun Life Balanced Advantage Fund | 16.47 | 9.07 | 12.24 | 13.16 |
| Kotak Balanced Advantage Fund | 14.69 | — | — | — |
| Invesco India Dynamic Equity Fund | 8.75 | 5.12 | 10.10 | 11.94 |
| Category Average (Balanced Advantage/ Dynamic Asset Allocation Funds) | 13.49 | 7.44 | 9.50 | 11.33 |
(Data as on December 30th, 2020; Source: Value Research)
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Top 10 Direct Aggressive Hybrid Funds in 2021
| Fund Name | Returns (%) | |||
| 1 year | 3 year | 5 year | 7 year | |
| BNP Paribas Substantial Equity Hybrid Fund | 16.13 | 11.91 | — | — |
| Canara Robeco Equity Hybrid Fund | 20.60 | 11.91 | 13.25 | 16.48 |
| SBI Equity Hybrid Fund | 13.32 | 9.39 | 12.23 | 15.71 |
| Mirae Asset Hybrid Equity Fund | 15.01 | 10.49 | 14.34 | — |
| Sundaram Equity Hybrid Fund | 10.85 | 9.37 | 12.37 | 11.74 |
| Principal Hybrid Equity Fund | 17.17 | 6.60 | 13.31 | 14.85 |
| DSP Equity and Bond Fund | 17.75 | 9.24 | 12.97 | 16.11 |
| Kotak Equity Hybrid Fund | 16.78 | 8.66 | 12.62 | 13.07 |
| Motilal Oswal Equity Hybrid Fund | 16.53 | — | — | — |
| Franklin India Equity Hybrid Fund | 14.58 | 7.64 | 10.85 | 14.81 |
| Aggressive Hybrid Fund Category Average | 15.24 | 7.12 | 11.12 | 13.81 |
(Data as on December 30th, 2020; Source: Value Research)
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How do direct plans fare better than regular plans?
1. Lower expense ratio
The expense ratio of a mutual fund represents the percentage of its daily net assets used for mitigating its annual operating expenses. Operating expenses include advisory fees, sales and agent commissions, fund administration expenses, investment management cost, marketing cost and distribution expenses. While regular plans are sold through distributors, brokers and advisors instead of commission, direct plans are directly sold to investors by AMCs or via online platforms without having to pay any distributor commission. Thus, the operating expenses of direct plans are usually up to 1% lower than the regular plan, which for direct plans converts to lower expense ratio.
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2. Higher returns
Direct plans’ lower expense ratios lead them to generate higher returns. Since the savings in the distribution expenses remains invested in the direct plans, the savings themselves begin to yield returns on their own because of the compounding effect. Though in the initial years the difference is marginal, it becomes sizable over the long term. For instance, if you invest Rs 30,000 in a regular plan of a fund through SIP for 25 years at 12% annualized returns with an expense ratio of 2%, the corpus would grow to Rs 3.74 crore. On the other hand, if the same amount of Rs 30,000 is invested through SIP in the direct plan of the same fund having 1% expense ratio, the corpus over the same time horizon would grow to Rs 4.48 crore. The difference in their corpora would be Rs 73.59 lakh with the direct plan outperforming the regular plan by 16%.
3. Higher Net Asset Value (NAV)
The NAV of the direct plan is higher than their regular counterparts owing to their higher returns. As the fund’s operating expenses are deducted from their net AUM, the lower expense ratio of their direct plan leads to higher NAVs. Moreover, as the compounding power comes into effect, the difference in their NAV tends to become bigger.
From where can one purchase direct plans?
Investors can buy direct plans from MF houses or their respective RTA, both through an online medium or physical application. But note, this process can be complex/unhandy as one requires applying separately with each house, which results in duplication of paperwork and creation of multiple passwords.
One can also invest in direct plans through independent financial advisors by paying an advisory fee. This fee is paid directly to the advisor and does not get reduced from your NAV.
A simpler and cost-effective way is to visit online financial marketplaces like paisabazaar.com, which allows investors to invest in direct plans of mutual funds through a single platform without incurring any zero advisory or annual maintenance fees.
