In what form do mutual fund distributors earn revenue?

In what form do mutual fund distributors earn revenue?

Mutual fund distributor is an individual or entity that helps investors to buy and sell mutual funds. They earn income in the form of commission from mutual funds investment.

How do you avoid mutual fund commission?

However, there is a way you can avoid paying hefty mutual fund commission. You can switch to direct plans of mutual funds. Direct plans of mutual funds involve 0\% commissions and thus they have a lesser expense ratio. A lower expense ratio implies higher returns.

Are mutmutual funds a good investment in India?

Mutual Funds have been only recently emerging as a big financial intermediary in India. In a vast country like India, taking the message of investing through mutual funds is a big marketing challenge. Investors need to be educated about the benefits and intricacies of mutual fund investing.

How is commission paid on mutual fund investments in India?

In India, the commission is paid on trail basis on Mutual Funds, which means you will continue to get the commission until an investment is held by the client. The commission is paid on a monthly basis and keeps increasing with an increase in business (asset under management).

Who are foriegn citizens/entities can invest in mutual funds in India?

Foriegn Institutional Investors (FIIs) registered with SEBI. Foriegn Citizens/entities are not allowed to invest in Mutual Funds in India. Notify me by email when others post comments to this article.

What is the Commission of a distributor of mutual funds?

Commission based : Generally, they are called as ‘distributors’ because they earn commission from the manufacturer instead of fees from the customer. Herein total limit is decided by the respect Mutual Fund house but SEBI has defined a CAP of 2.5\% for Mutual Fund house – a fund house generally shares 1 to 1.5\% with their distributors.