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Direct vs Regular Plans: A Risk-Adjusted Performance Analysis of Indian Equity Mutual Funds
Subject area: Management and Commerce · Area of research: Mutual Funds
DOI: https://doi.org/10.64388/IREV9I8-1714403
Abstract
The study analyse the performance difference between Direct and Regular plans of Indian equity mutual funds with a focus on return and risk-adjusted efficiency. The main objective is to compare absolute returns and evaluate performance using risk-adjusted measures such as Sharpe Ratio, Treynor Ratio, and Jensen’s Alpha. The study is based on secondary data collected for selected equity mutual fund schemes over the period 2015–2025.The findings reveal that Direct plans consistently generate higher returns than Regular plans. The risk-adjusted analysis also shows superior performance of Direct plans across all measures. Since both plan types are managed by the same fund managers and follow identical investment strategies, the primary reason for the performance gap is the difference in expense ratios. Lower costs in Direct plans allow investors to retain a larger portion of returns without taking additional risk.The results highlight the importance of cost efficiency in long-term wealth creation and provide practical insights for investors when choosing between Direct and Regular plans. The study concludes that Direct plans offer better overall performance, especially for informed investors who do not require intermediary advisory services.
Keywords
Direct Plans, Regular Plans, Equity Mutual Funds, Risk-Adjusted Returns.
How to cite this paper
@article{1714403,
author = {Ankita Jain, Prof. Kumud Chandra Goswami},
title = {Direct vs Regular Plans: A Risk-Adjusted Performance Analysis of Indian Equity Mutual Funds},
journal = {Iconic Research And Engineering Journals},
year = {2026},
volume = {9},
number = {8},
pages = {1046-1049},
issn = {2456-8880},
url = {https://www.irejournals.com/formatedpaper/1714403.pdf},
abstract = {The study analyse the performance difference between Direct and Regular plans of Indian equity mutual funds with a focus on return and risk-adjusted efficiency. The main objective is to compare absolute returns and evaluate performance using risk-adjusted measures such as Sharpe Ratio, Treynor Ratio, and Jensen’s Alpha. The study is based on secondary data collected for selected equity mutual fund schemes over the period 2015–2025.The findings reveal that Direct plans consistently generate higher returns than Regular plans. The risk-adjusted analysis also shows superior performance of Direct plans across all measures. Since both plan types are managed by the same fund managers and follow identical investment strategies, the primary reason for the performance gap is the difference in expense ratios. Lower costs in Direct plans allow investors to retain a larger portion of returns without taking additional risk.The results highlight the importance of cost efficiency in long-term wealth creation and provide practical insights for investors when choosing between Direct and Regular plans. The study concludes that Direct plans offer better overall performance, especially for informed investors who do not require intermediary advisory services.},
keywords = {Direct Plans, Regular Plans, Equity Mutual Funds, Risk-Adjusted Returns.},
month = {February},
doi = {https://doi.org/10.64388/IREV9I8-1714403}
}