Direct Mutual Fund Plans Beat Regular Schemes in FY26 Folio Growth

In FY26, direct mutual fund plans witnessed stronger growth in investor folios compared to regular plans, highlighting a shift in investor preference toward cost-effective investment options.

Direct plans added nearly 21 million new investor folios, while regular plans recorded around 15 million additions, marking one of the rare instances where direct plans outperformed traditional distributor-led schemes.

This growth trend comes despite volatile market conditions, where typically regular plans tend to perform better due to advisory support. However, increasing awareness among investors and the convenience offered by digital investment platforms have contributed significantly to the rise of direct plans.

Another key factor driving this shift is the growing popularity of gold and silver ETFs and fund of funds (FoFs). These investment options saw increased traction in the second half of FY26, supported by rising precious metal prices and global uncertainties.

Industry experts believe that the expansion of fintech platforms and investor education initiatives have played a crucial role in boosting direct plan adoption. Campaigns promoting mutual fund awareness have also encouraged investors to explore low-cost investment routes.

Overall, the mutual fund industry added around 36 million new folios in FY26 (till February), which is lower compared to the previous year, indicating that market volatility has impacted overall investor participation.

Despite this slowdown, the continued growth in direct plans reflects a long-term structural shift toward self-directed investing and cost efficiency.

Disclaimer – The fund’s investment objective, asset allocation, and risk profile are as described in the scheme offer documents, and investor shall read carefully before investing. All information has been obtained from sources believed to be reliable; however, no guarantee, warranty, or representation is made regarding its accuracy, completeness, or adequacy. Portfolio construction, execution strategies, and the use of permitted instruments are based on prevailing market conditions and subject to SEBI Mutual Funds regulations. Any income distributions are subject to applicable tax laws, which may change from time to time. Investors should consult their financial and tax advisors regarding applicable laws, investment horizon, and suitability of the Scheme.