New Delhi, Oct. 8 -- Regular and direct mutual fund plans invest in the same underlying securities with the same investment objective and fund manager. The key difference is that the fund in a regular plan is managed by agents or fund advisors, while in direct plans, the fund is managed directly by the investor.

This also makes the expense ratio of regular plans higher than that of direct plans as agents charge commission of around 0.5% to 1.5%, which is paid by the investor. This difference may appear small, but even a gap of around 1% can have a major impact on returns over a long investment horizon.

However, the higher expense ratio is not the only drawback investors should be aware of when choosing between regular and direct mutual ...