Most people have SIPs running for equity. To SIP or not to SIP is a whole different analysis, but I do not want to divert my analysis from the core here, which is how much is the delta if we go direct vs regular in equity mutual funds.
So to do this analysis, I picked two funds. One - HDFC Balanced Advantage Fund, and another is the Nippon India Small-Cap Fund. I chose these just to represent one very aggressive fund and one balanced fund.
Then I made the following assumptions. We invested Rs 2500 on the first of every month. The analysis accounted for holidays, where the investment would be triggered on the next working day.
Here is the outcome
HDFC Balanced Advantage fund | ​ | Nippon India Small Cap Fund |
INR 3,00,000 | Total investment | INR 3,00,000 |
INR 6,25,458 | Investment value on 31.1.2023 for Direct Mutual fund | INR 10,06,186 |
INR 6,50,734 | Investment value on 31.1.2023 for Regular Mutual fund | INR 10,74,469 |
4.04% (INR 25,276) | Absolute difference in return (Direct over regular) | 6.79% (INR 68,283) |
14.06% XIRR in Regular, 14.79% in Direct | XIRR difference | 22.85 % XIRR in Regular, 24.06% in Direct |
Another number to look at is the absolute difference compared to your total investment. For the Nippon Small cap fund, On the same INR 3,00,000, the direct plan gave INR 68,283 more! Thats a whopping 22% of your original investment that came back via direct plan!
Again, I am not saying do not invest via the advisor platform. However, if you are not receiving any specific service from them, do reconsider investment via direct funds.