What a Regular Plan commission actually costs you

Every mutual fund scheme comes in two plans. A Direct plan, bought straight from the fund house, and a Regular plan, bought through a distributor. Same portfolio, same fund manager, same holdings. The difference is the expense ratio.

Where the difference goes

A Regular plan carries a slightly higher expense ratio. That difference is the trail commission the fund house pays the distributor, and it is deducted inside the scheme rather than billed to you.

Percapita deals in Regular plans and is paid this way. There is no separate advisory or platform fee on top, which is why we say it plainly in the FAQs rather than leaving you to work it out.

The honest comparison

Over a long holding period the difference compounds, and it is fair to ask whether it is worth paying. The question is not "which expense ratio is lower" but "does the guidance change my decisions enough to cover it".

That depends on things worth being honest about:

• whether you would rebalance on your own, and actually do it
• whether you would hold through a drawdown without selling
• whether the scheme you would have picked alone is the one that suits your goal, horizon and risk profile

If the answer to all three is yes, a Direct plan may genuinely suit you better. We would rather say so than pretend otherwise.

What to ask any distributor

1. How are you paid, and by whom?
2. Does that change which schemes you recommend to me?
3. What happens to my investments if you stop operating?

Those three answers tell you most of what you need to know. Ours are in the FAQs, and we are happy to go through them on a call.