Direct Mutual Fund Plans Outpace Regular Schemes in FY26 Folio Growth

In the financial year 2025-26 (FY26), direct mutual fund plans have surpassed regular schemes in terms of folio growth. Despite market volatility, direct plans added 21 million folios compared to 15 million in regular plans. 

Direct Plans Lead Folio Growth 

Direct mutual fund plans have seen significant growth, adding 21 million individual investor folios in FY26, as of February. This growth outpaces the 15 million net additions seen in regular plans.  

This marks the second time direct plans have surpassed regular plans in annual folio growth, with the previous instance occurring in FY24. 

Interestingly, this growth occurred during a period of market turbulence, a time when regular plans typically perform better. The shift towards direct plans is partly due to increased interest in gold and silver exchange-traded funds (ETFs) and fund of funds (FoFs).  

These offerings saw a rise in inflows and folio additions in the second half of FY26, driven by a rally in precious metal prices and geopolitical uncertainties. 

Factors Driving Direct Plan Popularity 

Several factors have contributed to the growing popularity of direct plans. The ease of investing through fintech platforms and increased awareness of the cost advantages of direct plans have played a significant role.  

Since their introduction in 2013, direct plans have consistently shown higher growth rates, albeit from a lower base. 

Moreover, the push for transparency by the Securities and Exchange Board of India (SEBI) and the visibility of costs associated with regular plans have made investors more cost-conscious. Regular plans are generally more expensive due to commissions paid to distributors, making direct plans a more attractive option for cost-sensitive investors. 

Read More: Mutual Fund Industry Sees 21% Growth in AUM, Reaching ₹81.50 Lakh Crore in March 2026! 

Overall Folio Additions in FY26 

While direct plans have grown faster, overall investor additions in the mutual fund industry have been affected by market volatility.  

The industry added 36 million individual investor folios in FY26, as of February, compared to 56.2 million additions in FY25. This indicates a slowdown in overall folio growth despite the rise in direct plan popularity. 

Conclusion 

The financial year 2025-26 has seen direct mutual fund plans outpace regular schemes in folio growth. This trend highlights the increasing preference for cost-effective and transparent investment options among individual investors, even amid challenging market conditions. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.