15 Best Direct Mutual Funds in India 2023 – Top Direct Mutual Funds
Direct mutual funds or direct mutual fund plans are mutual fund schemes that are sold directly from the fund house or AMCs (Asset Management Companies) without the involvement of any third-party or broker. This eliminates commission and distribution fees of regular plans (mutual fund plans sold by a third-party), which eats into the investment returns. Explore our list of best performing direct mutual funds of 2023.
15 Best Direct Mutual Funds in India to Invest in 2023 – Top Performing
| Funds | Features |
| Navi Nifty 50 Index Fund – Direct Plan – Growth | AUM: ₹620.74 crore NAV: ₹11.19 Expense Ratio: 0.27% |
| Quant Tax Plan – Direct Plan – Growth | AUM: ₹ 2506.4 crore NAV: ₹250.01 Expense Ratio: 0.57% |
| HDFC Tax Saver Fund – Direct Plan – Growth | AUM: ₹9,992.81 crore NAV: ₹851.80 Expense Ratio: 1.19% |
| SBI Tax Advantage Fund – Series III – Direct Plan – Growth | AUM: ₹30.57 crore NAV: ₹63.87 Expense Ratio: 2.60% |
| Sundaram Long Term Tax Advantage Fund – Series I – Direct Plan – Growth | AUM: ₹17.81 crore NAV: ₹22.92 Expense Ratio:1.01% |
| Kotak Tax Saver Fund – Direct Plan – Growth | AUM: ₹3,161.09 crore NAV: ₹83.67 Expense Ratio: 0.68% |
| Quantum Tax Saving Fund – Direct Plan – Growth | AUM: ₹115.49 crore NAV: ₹82.54 Expense Ratio: 1.29% |
| Nippon India Tax Saver Fund – Growth | AUM: ₹11,924.32 crore NAV: ₹78.53 Expense Ratio:1.83% |
| SBI Long Term Equity Fund – Direct Plan – Growth | AUM: ₹11,923.53 crore NAV: ₹246.79 Expense Ratio: 1.12% |
| Taurus Taxshield – Direct Plan – Growth | AUM: ₹62.54 crore NAV: ₹125.78 Expense Ratio: 1.73% |
| SBI Contra Fund – Direct Plan | AUM: ₹7,635.09 crore NAV: ₹246.98 Expense Ratio: 1.00% |
| Canara Robeco Tax Saver Fund- Direct Plan- Growth | AUM: ₹4,562.79 crore NAV: ₹122.74 Expense Ratio: 0.61% |
| Parag Parikh Tax Saver Fund – Direct Plan- Growth | AUM: ₹941.56 crore NAV: ₹20.84 Expense Ratio: 0.82% |
| IDBI Flexi Cap Fund- Direct Plan – Growth | AUM: ₹368.73 crore NAV: ₹37.81 Expense Ratio: 1.17% |
| UTI Flexi Cap Fund- Direct Plan – Growth | AUM: ₹24,929.40 crore NAV: ₹236.81 Expense Ratio: 0.89% |
*Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
Best Direct Mutual Funds in India – Detailed Overview
Considered as one of the best performing direct mutual funds, this scheme aims to invest in the stocks of top 50 companies of India and achieve returns equivalent to the Nifty 50 Index. Let’s look into the scheme details.
- AUM: ₹620.74 crore
- NAV: ₹11.19
- Expense Ratio: 0.27%
- Minimum Investment: ₹10
- Category of Fund: Index Funds
- Annualised Returns 1 Year: 4.04%
- Annualised Returns 3 Year: NA
- Annualised Returns 5 Year: NA
2. Quant Tax Plan Direct – Growth
This scheme was launched by Quant Mutual Fund and made available to investors on April 15, 1996. Ankit A Pande, Chandramouli Alla, and Vasav Sehgal are present fund managers of this scheme. Quant Tax Plan focuses on generating capital growth by investing in equity shares with maximum growth potential.
- AUM: ₹2,506.48 crore
- NAV: ₹268.12
- Expense Ratio: 0.57%
- Minimum Investment: ₹500
- Category of Fund: ELSS
- Annualised Returns 1 Year: 5.91%
- Annualised Returns 3 Year: 38.43%
- Annualised Returns 5 Year: 21.01%
3. HDFC Tax Saver Fund – Direct Plan – Growth
Another top performing direct mutual fund scheme, HDFC Tax Saver Fund is an ELSS scheme launched by HDFC Mutual Fund and was made available on December 10, 1999. Roshi Jain and Priya Ranjan are present fund managers of this scheme. HDFC Tax Saver Fund Direct Plan aims to generate capital by investing in equity and equity capital instruments.
- AUM: ₹9,992.81 crore
- NAV: ₹851.80
- Expense Ratio: 1.19%
- Minimum Investment: ₹500
- Category of Fund: ELSS
- Annualised Returns 1 Year: 10.71%
- Annualised Returns 3 Year: 16.65%
- Annualised Returns 5 Year: 7.99%
4. SBI Tax Advantage Fund – Series III – Direct Plan – Growth
SBI Tax Advantage Fund Series III Direct-Growth is an Equity Linked Savings Scheme from SBI Mutual Fund. This scheme was made available to investors on June 29, 1987. This fund aims to grow capital for a period of 10 years by investing in equity and equity-related instruments. Nidhi Chawla and Rama Iyer Srinivasan are the current fund managers.
- AUM: ₹30.57 crore
- NAV: ₹62.87
- Expense Ratio: 2.6%
- Minimum Investment: ₹500
- Category of Fund: ELSS
- Annualised Returns 1 Year: 6.64%
- Annualised Returns 3 Year: 27.75%
- Annualised Returns 5 Year: 20.01%
5. Sundaram Long Term Tax Advantage Fund – Series I – Direct Plan – Growth
Sundaram Long Term Tax Advantage Fund was made available for investors by Sundaram Mutual Fund on February 26, 1996. Sudhir Kedia, Dwijendra Srivastava, and Rohit Seksaria are the fund managers of this ELSS. It aims to generate capital appreciation by investing in equity and equity-related instruments along with providing tax benefits u/s 80C.
- AUM: ₹17.81 crore
- NAV: ₹22.92
- Expense Ratio:1.01%
- Minimum Investment: ₹500
- Category of Fund: ELSS
- Annualised Returns 1 Year: 6.12%
- Annualised Returns 3 Year: 16.16%
- Annualised Returns 5 Year: 10.09%
6. Kotak Tax Saver Fund – Direct Plan – Growth
This scheme was launched by Kotak Mahindra Tax Saver Fund and made available to investors first on August 5, 1994. This scheme aims to generate long-term capital appreciation through its equity investments and offer tax deductions under Section 80C of the Income Tax Act. Harsha Upadhyay is the current fund manager of the Kotak Tax Saver Fund- Direct Plan scheme.
- AUM: ₹3,161.09 crore
- NAV: ₹83.67
- Expense Ratio: 0.68%
- Minimum Investment: ₹500
- Category of Fund: ELSS
- Annualised Returns 1 Year: 5.31%
- Annualised Returns 3 Year:16.36%
- Annualised Returns 5 Year: 12.78%
7. Quantum Tax Saving Fund – Direct Plan – Growth
Quantum Mutual funds made this scheme available to investors on September 19, 2005. George Thomas and Christi Mathai are the fund managers of this scheme. These are very high-risk Mutual funds. They aim to attain capital growth by investing in select stocks included in the BSE 200 Index. This scheme can also invest up to 20% of its assets in debt securities.
- AUM: ₹115.49 crore
- NAV: ₹82.54
- Expense Ratio: 1.29%
- Minimum Investment: ₹500
- Category of Fund: ELSS
- Annualised Returns 1 Year: 10.12%
- Annualised Returns 3 Year: 15.42%
- Annualised Returns 5 Year: 8.06%
8. Nippon India Tax Saver Fund – Growth
Nippon India Tax Saver Fund was made available to investors on June 30, 1995. This is also an Equity Linked Savings Scheme that carries very high risk. It focuses on long-term capital growth by diversifying an investor’s portfolio in equity and equity-related instruments. Asutosh Bhargava, Rupesh Patel and Akshay Sharma are the fund managers who handle this scheme.
- AUM: ₹11,924.32 crore
- NAV: ₹78.53
- Expense Ratio:1.83%
- Minimum Investment: ₹500
- Category of Fund: ELSS
- Annualised Returns 1 Year: 2.90%
- Annualised Returns 3 Year: 12.37%
- Annualised Returns 5 Year: 2.82%
9. SBI Long Term Equity Fund – Direct Plan – Growth
This scheme became available to investors on June 29, 1987. Dinesh Balachandran is the current fund manager of this scheme. It is an ELSS scheme that invests 80% of its portfolio in equity and debt instruments while the rest 20% is in money market instruments. The fund has a mandatory 3-year lock-in period and offers tax benefits u/s 80C.
- AUM: ₹11,923.53 crore
- NAV: ₹246.79
- Expense Ratio: 1.12%
- Minimum Investment: ₹500
- Category of Fund: ELSS
- Annualised Returns 1 Year: 5.99%
- Annualised Returns 3 Year: 17.05%
- Annualised Returns 5 Year: 9.60%
10. Taurus Taxshield – Direct Plan – Growth
This scheme from Taurus Mutual Fund was available to investors on August 20, 1993. It focuses on long-term capital growth with 80-85% exposure to equity and 20% to bonds and money market instruments. Its equity investments are diversified into financial, technology, services, consumer staples, healthcare and other sectors. Ramneek Kundra is the present fund manager of this scheme.
- AUM: ₹62.54 crore
- NAV: ₹125.78
- Expense Ratio: 1.73%
- Minimum Investment: ₹500
- Category of Fund: ELSS
- Annualised Returns 1 Year: 6.22%
- Annualised Returns 3 Year: 13.35%
- Annualised Returns 5 Year: 9.07%
11. SBI Contra Fund Direct Plan
This contra fund was made available to the general public on June 29, 1987. It offers long term capital appreciation by investing in equity and equity-related instruments by following a contrarian investment strategy. Mohit Jain and Dinesh Balachandran are the present fund managers of this scheme.
- AUM: ₹7,635.09 crore
- NAV: ₹246.98
- Expense Ratio: 1.00%
- Minimum Investment: ₹5,000
- Category of Fund: Contra Fund
- Annualised Returns 1 Year: 12.27%
- Annualised Returns 3 Year: 28.89%
- Annualised Returns 5 Year: 13.17%
12. Canara Robeco Tax Saver Fund Direct Plan-Growth
This scheme was made available to investors by Canara Robeco Mutual Funds on December 19, 1987. Over 96% of its holdings are in equities, of which 34.7% are in financial companies, while the rest is invested in technology, automobiles, construction, healthcare and others. Vishal Mishra and Shridatta Bhandwaldar are the fund managers who operate this scheme.
- AUM: ₹4,562.79 crore
- NAV: ₹122.74
- Expense Ratio: 0.61%
- Minimum Investment: ₹500
- Category of Fund: ELSS
- Annualised Returns 1 Year: 0.10%
- Annualised Returns 3 Year: 18.93%
- Annualised Returns 5 Year: 14.41%
13. Parag Parikh Tax Saver Fund Direct Plan- Growth
PPFAS Mutual Funds made this scheme available for investors on October 10, 2012. This ELSS is rated as a moderate-high risk investment. Its equity assets are diversified across financial, automobile, technology and energy sectors. Rukun Tarachandani and Raj Mehta are the fund managers of this scheme.
- AUM: ₹941.56 crore
- NAV: ₹20.84
- Expense Ratio: 0.82%
- Minimum Investment: ₹500
- Category of Fund: ELSS
- Annualised Returns 1 Year: 8.90%
- Annualised Returns 3 Year: 23.84%
- Annualised Returns 5 Year: NA
14. IDBI Flexi Cap Fund- Direct Plan- Growth
This scheme was launched by IDBI Mutual Funds and made available to investors on March 29, 2010. As a flexi cap fund, it aims to provide long-term capital appreciation to investors by investing in stocks across different market capitalisations. Alok Ranjan is currently working as the present fund manager of this scheme.
- AUM: ₹368.73 crore
- NAV: ₹37.81
- Expense Ratio: 1.17%
- Minimum Investment: ₹5,000
- Category of Fund: Flexi Cap Fund
- Annualised Returns 1 Year: -1.12%
- Annualised Returns 3 Year: 15.77%
- Annualised Returns 5 Year: 10.91%
15. UTI Flexi Cap Fund- Direct Plan Growth
This Mutual Fund scheme was launched by UTI Mutual Fund and made available to investors on November 14, 2002. It is a flexi cap equity fund, and thus, it can invest in stocks across different market capitalisations. It aims to generate long-term capital appreciation for investors. Ajay Tyagi is the fund manager who is monitoring this scheme.
- AUM: ₹24,929.40 crore
- NAV: ₹236.81
- Expense Ratio: 0.89%
- Minimum Investment: ₹5,000
- Category of Fund: Flexi Cap Fund
- Annualised Returns 1 Year: -8.62%
- Annualised Returns 3 Year: 13.52%
- Annualised Returns 5 Year: 11.72%
Also Read
How Do Direct Mutual Funds Work?
In a direct mutual fund plan, the investor purchases shares directly from the mutual fund company without the help of any broker or financial advisor. These funds have a much lower expense ratio than regular plans because there are no distribution fees involved. Direct plans could be any mutual fund equity funds, debt funds, hybrid funds, etc., depending on the mode of fund purchase. So, other than how the fund units are bought or sold, direct funds follow the same mechanism as any other mutual fund.
Let’s understand how a direct plan is different from a regular plan in terms of generating returns with an example. Let’s say, you have invested ₹12,000 per month for 8 consecutive years in a direct mutual fund and a regular mutual fund. Let’s consider that the returns for each fund are 11% and 10% annually, and a brokerage/distribution fee of 1% is deducted from the regular fund.
The table below highlights the value of your investment from these two funds.
| Parameters | Direct Fund | Regular Fund | Difference |
| Monthly SIP Amount | ₹12,000 | ₹12,000 | 0 |
| Returns | 12% | 11% | 1% |
| Tenure | 8 years | 8 years | 0 |
| Final amount redeemed | ₹19.19 lakh | ₹18.34 lakh | ₹0.85 lakh |
Calculate Your Mutual Fund Returns
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Features and Benefits of Investing in Direct Mutual Funds
Here are the benefits of investing in direct mutual funds:
1. No Third-party Involved
Direct mutual fund plans let the investor purchase the units directly from the fund house without any intermediary.
2. Low Expense Ratio
There are no distribution fees involved in direct mutual funds because the investor is purchasing the units directly from the AMC. This reduces the expense ratio of a mutual fund significantly.
3. High Net Asset Value (NAV)
The yearly cost of investing in direct mutual fund schemes is lower than in regular funds. The money that the investor saves by paying a low expense ratio is added to the net asset value of the units. A higher NAV results in greater returns.
4. Freedom to Investors
Direct mutual fund schemes offer the freedom to make investments without the participation of an advisor. Investors have the option to make decisions based on their own market research and convenience.
How to Select the Best Direct Mutual Funds for 2023?
Consider the following factors before investing in direct mutual fund plans:
- Investment Objective: Make sure the mutual fund aligns with your investment goals and risk appetite. whether it is capital appreciation, income, or a mix of both.
- Fund Performance: Evaluate the fund’s performance, especially in the last 5 years to get a fair idea regarding its consistency.
- Expense Ratio: Direct plans generally have lower expense ratios than regular plans, which can lead to higher returns over time.
- Diversification: Mutual funds with a diversified asset allocation could help mitigate risk and may provide risk-adjusted returns in the long term.
Taxation on Best Direct Mutual Funds
The following points highlight the taxation rules for direct mutual funds:
- Taxation of capital gains from mutual funds depends on the type of fund and the holding period of investment.
- Any mutual fund that invests 65% or more in equities or equity-related instruments is treated as an equity fund for taxation purposes. The rest are treated as debt funds.
- Short-term capital gains (STCG) on equity funds are taxed at a flat 15% rate. Meanwhile, long-term capital gains (LTCG) are taxed at a 10% rate. LTCG of up to ₹1,00,000 in a financial year is exempt from taxes.
- For debt funds, STCGs are taxed as per the investor’s applicable tax slab. In this case, capital gains are added to his/her taxable income.
- For LTCG on debt funds, the gains are taxed at a 20% rate after indexation.
Final Word
So, are direct mutual fund plans better than regular plans? The answer is yes and no. Investing in direct mutual funds is not for everyone. You need to have a sound knowledge in mutual fund investments before investing in a direct mutual fund plan. For regular plans, the intermediary could help you select the best mutual fund scheme as per your goal. So, if you’re a beginner investor, take the help of a professional investor to select the best direct mutual funds.
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FAQs
Ans: Yes, you can apply for a mutual fund direct plan offline by following these steps:
Obtain a physical application form and fill it out precisely.
Submit it at the investor service centre or to its registrar and transfer agent (RTA) or at the branch of the concerned mutual fund.
Ans: A direct plan requires an individual to invest in it directly by doing independent market research. Since an investor applies for this directly, the fund house charges no commission fee on your invested money. Thus, these plans come with a lower expense ratio.
Regular mutual fund plans involve getting recommendations from mutual fund distributors. Consequently, an indirect commission is applicable to the money you invest, which ultimately results in a higher expense ratio.
Ans: Generally, there are four types of risks associated with direct mutual fund investment:
1. Equity risk: Equity and hybrid funds invest in stocks of various companies whose price keeps fluctuating due to various market-related reasons. Such investments carry the risks associated with the stock market.
2. Credit risk: Individuals investing in debt funds are exposed to this risk.
3. Interest rate risk: Investments in debt instruments involves this risk as the bond price changes with their trade.
4. Inflation risk: Inflation is the general increase in the prices of various goods and services and can interfere with your investment goals.
Ans: You can purchase direct mutual fund plans both online and offline.
If you wish to follow the offline mode, you need to visit the branch office of the AMC and submit relevant documents such as self-attested identity proof, address proof and the application form. Make sure to choose the ‘direct’ option while filling out the form.
To invest in direct mutual funds online, you can
– Visit the website of the fund house
– Contact a Registrar & Transfer Agent (R&TA)
– Register yourself on a Mutual Fund Utilities (MFU) platform.
Ans: Individuals can hold the units of a direct mutual fund for as long as they want. Some mutual fund schemes have a ‘lock-in period’. It is the minimum time period for which the investor must hold his/her units.
Ans: You can invest in mutual funds as and when you wish. However, it is always advisable to invest when the values of the underlying assets are on the lower side. This will enable you to get more units.
Ans: To invest in direct plans of mutual funds, you need to go to the app or website of the AMC and purchase units of your chosen fund. You can also go to the website of an RTA or a fintech platform that does not charge commissions.
Ans: The direct plan of a mutual fund allows you to invest directly in the scheme without the involvement of a third party, such as a distributor or agent. As a result, these funds carry lower expense ratios than regular funds.
Ans: The following are the best direct mutual funds you should consider investing in:
1. Navi Nifty 50 Index Fund- Direct Plan- Growth
2. Quant Tax Plan- Direct Plan- Growth
3. HDFC Tax Saver Fund- Direct Plan- Growth
4. SBI Tax Advantage Fund- Series III- Direct Plan- Growth
5. Sundaram Long Term Tax Advantage Fund- Direct Plan- Growth
Ans: All mutual funds in India are regulated by the capital market regulator SEBI (Securities and Exchange Board of India) and AMFI (Association of Mutual Funds in India). Hence, mutual funds are completely safe from theft or fraud. But this does not mean that mutual fund investments are safe from market-related risks.
Ans: To start an SIP (Systematic Investment Plan), you need to go to an AMC’s website. Then, complete your KYC requirements and sign up with the AMC’s platform. After that, choose a fund and click on the SIP option to start investing. You will need to provide a payment option for the auto-debit to continue investing.
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Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
