A 1 percentage point fee
does not cost you 1 percent.
Direct and Regular are the same scheme, same manager, same holdings. The only difference is the trail commission baked into the Regular plan's expense ratio. Illustrative, identical 12 percent gross, 20 year horizon.
| Rs 10L invested once |
Direct |
Regular |
Gap |
| Net return kept | 11.5 | 10.5 | 1.0 pp |
| Corpus after 20Y (Rs L) | 88.2 | 73.7 | 14.5 |
| As a share of what you put in | 8.8x | 7.4x | 1.45x |
The fee is a flat 1 point a year. The damage is Rs 14.5L, almost one and a half times the original cheque, because every rupee skimmed is a rupee that never compounds. On a Rs 50L holding, that same trail is Rs 50000 leaving quietly every year, no bill, no line item you ever sign.