Check latest update on Mutual Funds from SEBI Chairman Tuhin Kanta Pandey; to be implemented from Nov 1 | What he said
The Securities and Exchange Board of India (SEBI) will make direct mutual fund plans the default option on asset management companies’ (AMCs) digital platforms from November 1, 2026, markets regulator chairman Tuhin Kanta Pandey said at NDTV Profit Ignite’s Diwali event.
Meanwhile, investors opting for regular plans will have to be informed about their higher expense ratios, helping them understand the additional costs associated with investing through a distributor, Pandey added.
Under the new rule, direct mutual fund plans will be selected by default unless investors choose otherwise. Investors can still opt for regular plans, but they must be informed that these plans carry higher expense ratios.
Regular and direct mutual fund plans invest in the same underlying securities, have the same investment objective and are managed by the same fund manager.
The only difference is that regular plans are distributed through intermediaries such as agents or financial distributors, while direct plans are purchased directly from the mutual fund or asset management company without a distributor.
This makes the expense ratio of regular plans higher than that of direct plans, as distributors receive commissions that are ultimately borne by investors through the fund's expenses. This difference may appear small, but even a gap of 1% can have a major impact on returns over a long investment horizon.
The expense ratio, which is the annual fee charged by a mutual fund to manage an investor's money and cover operational costs, is expressed as a percentage of the investor's total investment.
But regular plans also come with their own set of benefits. One of them being the service provided by a distributor, which includes help with scheme selection, transactions, documentation, operational support and ongoing handholding. This can prove to be helpful for a first-time or less experienced investor.
Announcing the new rule, Pandey further stressed that easier access to investments must go hand in hand with greater awareness. "Easy access does not guarantee understanding," he was quoted as saying by NDTV.
He cited SEBI's investor survey, which found that 63% of households were aware of at least one securities market product, but only around 9.5% participated in the market. "Investing must be a choice made with open eyes, knowing what you buy, what it costs, and what you risk," he said.
Pandey also announced during the event that the markets regulator will review the frameworks that are currently governing main-board initial public offerings (IPOs) and small and medium enterprise (SME) IPOs.
Apart from that, Pandey said SEBI would also assess whether Indian market participants face higher compliance costs than those in other emerging and developed economies. The regulator will soon release a consultation paper proposing changes to some of its existing requirements, he added.
For about a decade, Livemint—News Desk has been a credible source for authentic and timely news, and well-researched analysis on national news, business, personal finance, corporates, politics and geopolitics. We bring the latest updates on all the listed companies on BSE and NSE, startups, mutual funds, Union ministries, geopolitics, and untapped human interest stories from around the world, helping our readers to stay informed on the latest developments around the globe. Our Coverage Areas 1. Companies: Comprehensive news and analysis on listed and unlisted companies, corporate announcements, corporate chatter, C-suite, business trends, hiring alerts, layoffs, work-life balance, world's top billionaires and richest and more. 2. Personal finance: Insights into mutual funds, small savings schemes like - PPF, SSY, post office savings scheme, stock to watch, personal loans, credit cards, top bank FDs, real estate, income tax and more. 3. Politics: Comprehensive coverage of general elections, state elections and bypolls, Lok Sabha, Vidhan Sabha, Parliament, PMO, PIB, finance ministry, home ministry, among other union ministries and government departments. 4. National News: From metro cities like Delhi, Mumbai, and e to untapped stories from rural India, we cover human interest, health, education, crime and courts, and law and order, among other areas of public interest. 5. Economy: In-depth analysis of India's macro and micro-economic indicators like- GDP, inflation, forex, fiscal deficit, current account deficit, interest rate cycle, economic recovery, RBI circulars, indirect taxes, GST, Insolvency and Bankruptcy imports, exports and everything that impacts Indian economy. 6. Geopolitics: Well-rounded and deeply researched coverage on US News, Oval Office European Union, Ukraine Russia War, middle-east crisis, royal families and global leaders like - Donald Trump, Vladimir Putin, Kim Jong Un, Xi Jinping and premiers of other leading economies in the world. Meet the Team 1. Gulam Jeelani, Political Affairs Editor 2. Sugam Singhal, Senior Assistant Editor 3. Chanchal, Assistant Editor 4. Sanchari Ghosh, Chief Content Producer 5. Pratik Prashant Mukane, Chief Content Producer 6. Sayantani Biswas, Chief Content Producer 7. Ravi Hari, Deputy Chief Content Producer 8. Garvit Bhirani, Deputy Chief Content Producer 9. Akriti Anand, Senior Content Producer 10. Jocelyn Felix Fernandes, Senior Content Producer 11. Swastika Das Sharma, Content Producer 12. Mausam Jha, Content Producer 13. Riya R Alex, Trainee Content Producer
Get Latest real-time updates
Catch all the Instant Personal Loan, Business Loan, Business News, Money news, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More
✕
Wait for it…
Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.