Understanding the 70:30 Revenue-Sharing Structure in Mutual Fund Distribution

Last Updated: 7 Jan 2026

A revenue-sharing model is a business arrangement where income earned from commissions is shared between two or more parties based on a pre-agreed ratio. In mutual fund distribution, this model is commonly used when a primary distributor works with authorised persons or sub-agents to service clients and grow assets under management. Instead of earning separately, both parties share the trail commission generated from investments, ensuring aligned goals and ongoing income.

The 70:30 revenue-sharing structure is one of the most frequently used arrangements in mutual fund distribution. Under this model, the primary distributor retains 70% of the trail commission, while the remaining 30% is shared with authorised persons who manage client relationships or support sales. This structure enables consistent earnings, shared responsibility, and long-term business growth for both parties. This blog will cover its importance, eligibility, process, payouts, challenges, and common doubts.

How Can the 70:30 Revenue-Sharing Structure Benefit Distributors

The importance of the 70:30 revenue-sharing structure is generally understood based on how trail commissions operate in mutual fund distribution. Since trail commissions are linked to assets under management (AUM) and paid on an ongoing basis, distributors often use mutual fund revenue-sharing models like 70:30 to organise earnings, partnerships, and business growth in a practical way.

Based on how trail commissions typically work, this structure can deliver the following benefits:

• Allows earnings to grow gradually as AUM increases over time.
• Provides sub-agents with a predictable share of trail income, which supports long-term engagement.
• Aligns the focus of both distributors and sub-agents towards AUM growth and client retention.
• Helps maintain clear and trackable commission flows within the existing trail-based framework.
• Supports steady and sustainable income rather than one-time earnings.
• Makes it easier to manage larger distributor networks with multiple sub-agents.
• Encourages trust through consistent and pre-agreed payout arrangements.

Eligibility Criteria for Revenue Sharing

Every asset management company sets its own criteria regarding when 70:30 revenue sharing might be applicable. But some basic criteria that mutual fund distributors should meet are as follows:

• A valid ARN registration for the primary distributor.
• EUIN registration for authorised persons who handle client interactions.
• Full AMFI compliance, including renewals and mandatory certifications.
• Active distributor status with regular transactions.
• A signed agreement with AMCs or distribution platforms defining the split.
• Proper KYC and business documents for audit and verification.
• Clear understanding of slabs, payout cycles, and record-keeping.

Step-by-Step Process of 70:30 Revenue-Sharing Implementation

Once eligibility is confirmed, the revenue-sharing model works through a simple and transparent process. This process ensures that commissions are calculated correctly and shared smoothly.

The exact steps will vary across asset management companies. But here’s an overview of what might follow:

• AMC calculates the monthly trail commission based on the average AUM.
• The full commission amount is paid to the primary distributor.
• The distributor calculates the 70:30 commission split.
• Authorised person payout is processed through bank transfer or the platform.
• Monthly AUM and commission reports are generated.
• Statements are shared with authorised persons for clarity and tracking.
• Both sides maintain documentation for audits and compliance.

Fees, Payouts, and Processing in the 70:30 Model

There are no separate fees charged for using this model. The split happens within the trail commissions already paid by the AMC. GST is applied on the full commission amount before the split. Processing is usually monthly, and some AMCs may follow slab-based structures depending on AUM levels.

Component	Details
Direct Fees	No extra fee. Split done within the trail commissions.
Payout Cycle	Monthly payout based on AMC timelines.
GST Treatment	GST applied on the full commission before splitting.
AUM Thresholds	Commission slabs may vary by AUM.
Processing Method	Automated platform-based calculations and transfers.
Reports	Monthly AUM and commission summaries for both parties.

 

Common Challenges in 70:30 Revenue Sharing and Solutions

Although the model is simple, some practical issues may arise related to the 70:30 revenue share in mutual fund distribution. These challenges can affect payout accuracy or delay commissions. Clear systems and agreements can easily solve them.

Common challenges and solutions:

• EUIN errors leading to misattributed commission

Solution: Double-check EUIN entries and use platforms that auto-verify details.

• Delayed payouts due to AMC processing timelines or manual tracking

Solution: Use automated distributor platforms and fix internal payout schedules.

• GST complications when applied to the full commission amount

Solution: Use proper accounting tools and follow updated GST rules.

• Unclear agreements between distributors and authorised persons

Solution: Draft written contracts with clear slabs, roles, and responsibilities.

• Manual AUM tracking is causing errors in commission splits

Solution: Adopt technology tools that provide real-time AUM and payout dashboards.

• Disputes about the split percentage or missing records

Solution: Maintain digital statements and share monthly reports promptly.

Frequently Asked Questions

Does the 70:30 split apply to trial commissions only?

Yes, the 70:30 model is mainly applied to trial commissions because they are recurring and easy to split. Upfront commissions are not commonly shared under this structure due to SEBI rules.

How is AUM calculated for this model?

AMC calculates AUM using daily fund values and then derives a monthly average. This average becomes the base for calculating trail commissions.

Do SEBI regulatory changes affect the split?

SEBI rules may change the commission rates offered by AMCs, but the agreed split between the distributor and the authorised person usually remains the same. Only payout amounts may differ if AMCs revise their structures.

Can any authorised person participate in the 70:30 split?

Yes, an authorised person can join the model if they hold a valid EUIN and meet AMFI compliance requirements. The primary distributor must also agree to onboard them under the split.

Is there a minimum AUM required for revenue sharing?

Most AMCs do not set a minimum AUM requirement for the 70:30 model. However, some distributors may add internal limits to keep payouts meaningful and manageable.