MF industry pays commission of Rs. 18.6 bn to distributors in FY12

Citibank NA registered the highest absolute increase in commission revenues to Rs. 1.29 billion in FY12 from Rs. 880 million in FY11

July 12, 2012 2:51 IST | India Infoline News Service
Over 13 mutual funds out of the top 20 mutual fund distributors have seen an increase in their commission revenues in the financial year 2011-12, according to the AMFI (Association of Mutual Funds in India) data. The top 20 distributors saw an increase of Rs. 1.48 billion in commission revenues in FY12 to Rs. 11.74 billion compared to Rs 10.26 billion in FY11.

The data said, the mutual fund industry has paid a total of Rs. 18.6 billion in commissions to 269 large distributors in FY12. The share of these 20 large mutual fund distributors has increased from 57% in FY11 to 63% in FY12 in terms of revenues.

Pankaaj Maalde, head-financial planning, ApnaPaisa.com, “After the abolition of entry load most individual IFAs (independent financial advisors) stopped distributing mutual fund products and have exited the business due to no commission. Now, online investing is also increasing which has definitely helped big players to garner more business which automatically lead to more commission.”

In the national distributor category, Surat-based NJ India Invest continues to remain the top mutual fund distributor for FY11 and FY12. In the banking segment, Citibank NA registered the highest absolute increase in commission revenues to Rs. 1.29 billion in FY12 from Rs. 880 million in FY11. In the same period, HSBC Bank commission revenues increased to Rs 1.54 billion from Rs 1.19 billion. ICICI Bank commissions increased to Rs. 550 million in FY12 from Rs. 350 million in FY11.

Amit sethi, owner, Amvi Financials, said, “In FY11-12, interest rates were touching their peak, and investors wanted to lock-in their money in FMPs (fixed maturity plans). Fund houses gained the benefit by introducing several FMPs which got good response from investors. Also, weak equity market attracted investors to buy more units of mutual funds so that they can benefit from cost averaging. Hence, it helped increasing the sale as well as commission.”

Mr Maalde, “The most important factor while investing in mutual fund schemes is quality advice which an investor should look in before selecting distributor. It is also important to know other charges levied by big players as most big players have opted for transaction charges and investors must know this.” 

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