What is a Fund House or AMC?
A fund house or Asset Management Company (AMC) is a company that manages investors’ money by investing it in things like stocks, bonds, and other financial products. For example, SBI Mutual Fund, Nippon India, and HDFC Mutual Fund.
Who is a distributor?
A distributor is someone who helps you invest in mutual funds and earns a commission from your investment.
For example, if you invest ₹100 in a mutual fund through a distributor, the Asset Management Company (AMC) may deduct around ₹1 as commission and give it to the distributor. This means only ₹99 actually gets invested. But if you invest in a direct mutual fund, there’s no distributor and no commission, so the full ₹100 is invested, which can lead to higher returns over time.
What is the difference between Regular and Direct Mutual Funds? | Aspect | Regular Mutual Fund | Direct Mutual Fund | | Definition | A mutual fund investment made via a third-party agent or distributor who receives a commission from the fund. | A mutual fund investment made directly through the AMC (Asset Management Company) with no intermediary. | | Expense Ratios | Higher, as distributor commissions are included in the total expense ratio. | Lower, since there are no commissions involved. | | Returns | Slightly lower, as some returns are eroded by commission and higher fees. | Higher, due to cost savings from avoiding intermediary charges. | | Investor Control | Limited — the advisor/distributor typically recommends and manages fund choices. | Full control — investors select and manage funds based on their own analysis and preferences. | | Investment Guidance | Offers advisory services, including fund recommendations and portfolio reviews. | No advisory support — investors are expected to conduct their own research and decision-making. | | Example | HDFC Equity Fund – Regular Plan: Purchased via a financial advisor or broker. | HDFC Equity Fund – Direct Plan: Purchased directly through HDFC AMC’s website or official app. |
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