Not all fund houses have reduced trail commission to the extent of 15 to 20 bps with rationalization of TER.
While UTI Mutual Fund has reportedly decided to absorb reduction of 15 bps, Franklin Templeton is said to have shared the impact of such a reduction to some extent. Similarly, Tata Mutual Fund has reportedly capped trail commission at 50 bps. That means, if your trail commission was 60 bps, the fund house would now pay you 50 bps, a reduction of 10 bps.
A senior fund official from Franklin Templeton requesting anonymity told Cafemutual that his fund house has decided to share the reduction. “If we can share the gain with distributors why can’t we share the pain. Hence, we have developed a certain criteria to decide what would be the impact of sharing. The quantum of such an arrangement would obviously depend on share and longevity of assets.”
At least eight fund houses have reduced trail commission to the extent of 15 to 20 bps following rationalization of TER by SEBI.
Earlier, SEBI has revised the definition of top cities and beyond top cities for additional TER. It has also reduced expenses charged in lieu of exit to 0.05%. Both these changes have led to reduction in overall TER and trail commission.