Nothing in life is really free, is it? When you buy Mutual funds through your online bank account, your broker or your distributor, you buy ‘Regular’ Plans of Mutual Funds. You don’t pay your broker directly, but he/she gets paid around 1% a year of your latest investment value from the Mutual Fund Company,every single year.
When you stay invested for 10 years, you end up giving a whole 10% of your portfolio value to your broker. You could have spent that on your kids, but instead your broker gets to spend your money on his kids.
Clearfunds sells only Direct Mutual Funds. When you buy Direct Mutual Funds you save money on hidden commissions and brokerage. These savings go directly to you in the form of higher returns.Hence, the NAV of a Direct Mutual Fund is always higher than that of a Regular Mutual Fund.