​The Net Asset Value (NAV) of a mutual fund is the per-unit value of the fund after deducting its expenses. One of the key components impacting NAV is the expense ratio, which is the fee charged by the fund house to manage the investor’s money.

In regular mutual funds, the expense ratio includes an additional commission paid to intermediaries or distributors. This increases the overall cost, which is deducted from the fund’s assets, resulting in a lower NAV.

In direct mutual funds, there are no intermediary commissions. The expense ratio is lower, and less is deducted from the fund’s assets, leading to a higher NAV over time for the same underlying portfolio.

Though both direct and regular plans invest in the same securities, the difference in costs over time causes the NAV of direct plans to be consistently higher. This difference, though small annually, can significantly impact long-term returns.

Note: Tradejini, through CubePlus, offers only direct plans, ensuring zero commission charges and greater long-term wealth accumulation for investors. Know more about how Expense Ratio in a Mutual Fund can significantly impact returns in the long term.​