Learn Lesson 1 of 6 6 minutes
What does a Regular plan actually cost?
One fund, one portfolio, one manager, two prices. The difference between them is a distributor's commission, and it is the most reliable number we hold — not because it is clever, but because it is subtraction.
Built on P5 — the Direct/Regular divergence, measured from the NAVs.
Every open-ended mutual fund in India is sold in two plans. A Regular plan pays a distributor a trail commission out of the scheme's assets, every day, for as long as the units are held. A Direct plan does not. Everything else about them is identical: the same portfolio, the same manager, the same trades on the same mornings.
That makes the pair a controlled experiment nobody had to design. Whatever separates the two NAV series is the commission and nothing else, which is why this number can be stated plainly when almost nothing else on this site can.
On a fund a great many people hold
The largest equity fund in this build is Parag Parikh Flexi Cap Fund — ₹1.46 lakh Cr, Equity Scheme - Flexi Cap Fund. Here is what its two plans did over the 12 years of NAV history we hold for both.
Direct plan
16.23%a year, Sep 2014 to Sep 2026
Parag Parikh Flexi Cap Fund - Direct Plan - Growth
Regular plan
15.39%a year, same portfolio, same days
Parag Parikh Flexi Cap Fund - Regular Plan - Growth
The difference
0.84% points a yearand note the unit: this is a gap between two growth rates, so it is percentage POINTS a year, not a per cent of anything
Whatever you think of the fund, this figure is not a judgement of it. It is the price of buying the same thing through an intermediary, and it is charged whether the fund has a good decade or a bad one.
Measured from the two NAV series, not quoted from a document. See it on the fund page.
What that is, in money
A percentage point a year is hard to feel. Compound the same gap on one lakh of rupees for ten years and it stops being abstract.
On ₹1,00,000, over ten years, at this fund's own gap
₹31,515the difference between the two plans' ending values — money that went to a distributor rather than compounding
Computed from the measured 0.84% points a year, on the fund page's own figure.
It is worth saying what this is not. It is not a forecast of what anyone will earn, and it is not a claim that this fund will keep growing at either rate. It is one arithmetic operation — the same ending value computed twice, once with the commission and once without — on a fee that is already known.
You can see it in a single day's prices
On 18 Sep 2026 the same portfolio was quoted at two prices:
Direct, growth
₹89.86Parag Parikh Flexi Cap Fund - Direct Plan - Growth
Regular, growth
₹81.85Parag Parikh Flexi Cap Fund - Regular Plan - Growth
Do not read the ratio of those two numbers as the cost. Two plans of the same fund do not always start life on the same day or at the same unit value — Direct plans only exist from January 2013, and many funds are older than that — so the distance between two NAVs mixes the fee with wherever each series happened to begin. The honest measurement is the one above: the difference between the two growth rates over the window in which both series exist.
Is this fund unusual?
No, and that is the point of the lesson. Across the 41 funds in Equity Scheme - Flexi Cap Fund for which both plans can be measured, the middle fund's mark-up is 1.45% points a year, with the cheapest tenth at 0.84 and the dearest tenth at 1.90.
Check it yourself: every fund, ordered by its Regular-plan mark-up
Why this is not simply the expense ratio
Parag Parikh Flexi Cap Fund publishes an expense ratio of 1.30% a year on its Regular plan and 0.69% on its Direct plan, as of 30 Sep 2026. The difference between those two published figures is 0.61% points a year.
That is a number the fund house prints today. The gap measured from the NAVs is a number the fund house charged, every day, over 12 years — during which the expense ratio changed, sometimes more than once, and the two plans' assets grew at different speeds. The two figures answer different questions, and where they disagree it is the measured one that describes what actually happened to the money.
The one number our own study could not knock down
We tested 22 measures over 646 equity funds and 33,299 fund-date observations to see whether any of them forecast which fund would beat its peers. None of them did. The Direct/Regular choice was the exception, and it is the exception precisely because it is not a forecast: across 33,028 fund-dates the median gap was 1.21% points a year, with the middle half between 0.91 and 1.58.
Put beside the measures that were supposed to identify skill — none of which cleared the correction for having tested 22 things at once — that single mechanical difference is larger than all of them together.
The study, in full: Does any of this predict which fund wins?
The argument against this lesson
A Regular plan is not only a fee; it buys a person. If a distributor stops a household selling everything in the third week of a crash, or gets a lapsed instalment restarted, that can be worth more than the commission several times over — and unlike the fee, it leaves no trace in any file we hold. This lesson measures what is visible and is silent on what is not, which makes the comparison unfair in exactly one direction. The honest statement is narrow: this is what the intermediary costs, measured. Whether it is worth paying is a judgement about a relationship, not a number, and it is not ours to make.
Everything above is a description of what has already happened, measured from what fund houses, AMFI and the exchanges publish. It is not advice, not a recommendation to buy, sell or hold anything, and not a forecast — neither Anveshan nor Lineage Money is a SEBI-registered investment adviser or research analyst.