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AMC News Quantum MF to pay commission to distributors

Quantum MF to pay commission to distributors

The fund house will come out with regular plans of all its schemes with effect from April 1, 2017.
Nishant Patnaik Feb 15, 2017

In its communication sent to investors, Quantum Mutual Fund has announced that the fund house will launch regular plans of all its schemes with effect from April 1 2017. Simply put, the fund house, which is known for its direct-to-investor model, will start paying commissions to distributors.

Upholding SEBI’s move on commission disclosure, the fund house has said, “From the very beginning, Quantum has adamantly maintained that we have no problem using the distribution model as long as commissions are disclosed to investors. We have been accused of being anti-distributors, of denying others the right to an income, and have weathered a decade's worth of invective from some folks who simply have not comprehended what we have been saying. We have said it over and over again through the years: we are happy to work with distributors if their commissions are disclosed. It's as simple as that.”

The fund house has clarified that they will not pay upfront commission to their distributors. Instead, they would pay trail commission of 0.15%, 0.20% and 0.25% of AUM in the first three years consecutively. Fourth year onwards, Quantum MF will pay commission of 0.15% of AUM.

“In keeping with our philosophy of being a low cost fund, the commission structures proposed here are amongst the lowest in the industry. The aim is not to make distributors rich, but to compensate them fairly for their advice and for the expenses, which they may bear. Further, the distributor doesn't get rewarded if he switches investments in and out of our funds, but only if investors' savings remain with us for the long term: the distributor earns higher commission only after completion of 24 months, thereby encouraging the culture of long-term investing,” wrote the fund house in the communication sent to investors.

The fund house has been around for over ten years but due to its direct-to-investor model, its AUM still stood at Rs.860 crore as on December 2016. “We have sacrificed our growth of AUM and remained steadfast to our principle of transparency, because we adhere to the simple belief that an investor should know what he is being charged for a service.”

So far, a few national distributors like FundsIndia and Prudent distribute Quantum’s direct plans MF schemes. 

7 Comments
K v Raghupathi · 4 months ago
The gentlemen who authored this decision, have, atlast understand the ground reality by default that -without getting the service of an ambassador (IFA in this case) they cannot see the opportunity that is available beyond their vision. In one of the presentation, the AMFI CEO, who was comfortable for just 9 months in that chair, said there are 274 districts in India the industry is yet to get an application from an investor.

Till we bring-in the investor's application and cheque to an A M C, that investor is invisible to any AMC. and IFAs' are paid for their service and not that AMCs are doing favours to IFAs by offering brokerage.

We are paid, not for our service, BUT FOR AMCs ABSENCE in such locations, still they are getting the business.
Girish · 4 months ago
Only trail 'n that also. 15bps is very less. It is more da gerus than nil. Nothing is better than nonsense. We should avoid v? quantum
Reply
Atul Babubhai Patel · 4 months ago
Capital appreciation means what? My client put 1,00,000/- ,in 01/01/2014/ in debt fund. On the day 01/01/2017 his amount isRs.1,50,000, now on give capital appreciation to equity fund, AMC STP Rs.50,000/- in equity fund. As par my knowledge when I give notice of application from that DT capital appreciation is start. Please if any one has answer ,please give suggestation.
Nakka · 4 months ago
Huh what a shit this AMC speaking. There expense ratio in all the funds are more than 2.5 . Did they ever disclosed in absolute terms how they are spending that money of investors. Did they disclose all there ceo and fund manages salaries? Ground reality is time is passing and there AUM is not growing. The small AMC like ppfas are doing better than quantum so they reliased the importance of distibutor and very soon they will increase the commissions also.
Rahul · 4 months ago
Finally the AMC realised the worth of IFAs. But Trails too must be parallel to industry. Earlier Quantum had without IFA, direct to client Model. Switching to regular plans is the winning of IFAs.
Dhaval Shah · 4 months ago
First of all Quantum does not have any pull among investors. The fund house is making derogatory comments towards IFAs about not wanting to make them rich at the cost of investors as if distributors are being paid a bomb and they are the Messiah of investors. On the same grounds you should not be drawing high salaries as it ultimately affects the investors returns. As a gift from the investor community for you poor fund managers you can take the IFA commission as a reward for your high moral ground. Although most IFAs would just be struggling to make ends meet we can do more than your mere lip service for investors.
You are too good for an IFA like me to promote your funds. Thank you. Not interested.
Pankaj Shah. · 4 months ago
Change of heart by Quantum Mf.I welcome the idea of paying commission to IFAs.Even big fund houses require IFAs.
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