Mutual Fund explained: SEBI's new default rule

Published 29 October 2026 at 7:01 pm · 10 sources · 200+ searches today

As of 29 October 2026, SEBI has announced that Direct Mutual Fund Plans will become the default option on asset management companies’ digital platforms from 1 November. That is why mutual fund searches are rising in India today: investors want to know what changes, whether SIPs are affected, and how Direct and Regular Plans differ.

Key facts

1 November 2026: Direct Mutual Fund Plans become default on AMC digital platforms
SEBI Chairman Tuhin Kanta Pandey announced the change on 28 October
Existing SIPs and Regular Plans will not auto-convert to Direct Plans
Direct and Regular Plans usually hold the same portfolio and fund manager
Example: ₹10,000 SIP for 20 years showed ₹84.53 lakh vs ₹75.06 lakh

What changed

SEBI has said that from 1 November, Direct Mutual Fund Plans will be the default option on AMC digital platforms. The announcement was made by SEBI Chairman Tuhin Kanta Pandey on 28 October.

This does not mean Regular Plans are banned. Investors can still choose Regular Plans, but they must be clearly told about the higher expense ratio.

The rule is described in the reports as applying to AMCs’ own digital platforms. It is not yet clear whether it will also cover third-party investment platforms.

Direct vs Regular plans

The main difference is the distribution layer. In a Direct Plan, investors invest directly with the mutual fund house. In a Regular Plan, a distributor or intermediary is involved.

Because Direct Plans do not include distributor commission, their expense ratio is usually lower. Regular Plan investors will need to be informed about that extra cost.

For the same scheme, Direct and Regular Plans generally have the same portfolio and the same fund manager. The difference is mainly in distribution cost and expense ratio.

Why investors are paying attention

The rule matters because even a small cost difference can add up over time. One illustrative example said that a ₹10,000 monthly SIP for 20 years at 12% annual pre-expense return could build ₹84.53 lakh in a Direct Plan and ₹75.06 lakh in a Regular Plan.

That example suggests a difference of about ₹9.47 lakh, but it is only an illustration and not a guaranteed return.

People are also searching because the change arrives right before the 1 November deadline, and many investors want to know whether their current SIPs will be affected.

What to watch next

As of 29 October 2026, the key point is that existing SIPs or Regular Plans will not automatically convert into Direct Plans. The change mainly affects new purchases or the default choice shown on AMC digital platforms.

SEBI has also asked investors to be careful when choosing a Direct Plan, because it comes without distributor support.

The practical question to watch is how AMCs implement the default setting and whether any further clarification comes on whether third-party platforms are included.

Frequently asked

What did SEBI announce about mutual funds on 28 October 2026?

SEBI said Direct Mutual Fund Plans will be the default option on AMC digital platforms from 1 November. The announcement was made by SEBI Chairman Tuhin Kanta Pandey.

Will my existing SIP automatically change to a Direct Plan?

No. The reports say existing SIPs and existing Regular Plans will not automatically convert to Direct Plans. The change is mainly about new purchases and default selection on AMC platforms.

What is the difference between Direct and Regular mutual fund plans?

In a Direct Plan, you invest directly with the mutual fund house. In a Regular Plan, a distributor or intermediary is involved, which usually makes the expense ratio higher.

Are Regular Mutual Fund Plans being stopped?

No. Available reports say investors can still choose Regular Plans. They will just need to be clearly informed about the higher expense ratio.

Sources

Researched automatically from live news and written by Simpledot's AI; facts are limited to what the sources above report as of the published time. Spot an error? Tell us.