Direct Mutual Funds do not involve a broker and hence no commission is paid to anyone. Commissions drain your returns by 40% over long run. There are upfront and trail commissions.
A more important difference is that with indirect funds, brokers will push you products that serve their interest better. So you may be sold products with higher expenses and hence earn lesser returns.
So how does a Direct MF advisor make money? Simple, you pay them. What you pay will be tiny fraction of what the broker would have anyway taken away. You get this for best advice that is unbiased and the technology/app support.
Direct plans are growing faster (36% CAGR) than indirect plans (20% CAGR). Avoid indirect funds and go with a direct mutual fund platform. Check out jamawealth.com and give it a try.
