Thanks to the ‘Mutual Fund Sahi Hai’ campaign, the commission earned by mutual fund distributors is growing much faster than the returns delivered by fund houses to investors.

The AMC of mutual funds had increased the commission paid to distributors by 71 per cent in the financial year ended March to ₹8,533 crore, against ₹5,000 crore paid in the same period last year, according to the latest data released by the Association of Mutual Funds in India.

The number of AMFI-registered commission-earning distributors increased to about 979 against 732 logged in FY17.

Interestingly, the number of distributors who earned more than ₹1 crore a year was over 800 last fiscal, compared to 470 in FY17.

AUM jumps

Backed by a strong bull run and steady inflow through systematic investment plan, the overall assets under management of the mutual fund industry increased to ₹21.36 lakh crore last fiscal against ₹17.55 lakh crore in FY17.

The net inflow last fiscal was at ₹2.71 lakh crore and the number of investor folios jumped to 7.1 crore from 5.5 crore.

“While the fee paid by mutual funds appears substantial, the cost of acquiring customers have increased, particularly beyond the top 15 cities where the use of computers is limited,” said Prashant Jain, an independent financial advisor and mutual fund distributor.

The best performing Axis Focused 25 fund delivered a return of 19 per cent to investors while Axis Equity Fund and UTI Bluechip Flexicap delivered returns of 18 per cent and 17 per cent, respectively.

MFs’ commission are paid both upfront and on trail basis, depending upon the scheme. The trail fee paid in equity, tax-saving and hybrid schemes in equity schemes (except arbitrage) is about 1-1.25 per cent a year. In debt schemes (excluding liquid), the trail is 0.15-0.75 per cent.

Banks dominate

Like last year, the top 10 commission-earners were dominated by banks, except Surat-based NJ Indiainvest Pvt Ltd (₹787 crore) that ledi the list. It was followed by HDFC Bank (₹641 crore) and SBI (₹558 crore).

Overall, the top 10 MF distributors’ commissioned increased by 78 per cent to ₹4,237 crore (₹2,379 crore).