Calculation of trail commission

- Rashika Mehrotra

The trail commission varies between 0.25 per cent to 0.75 per cent p.a. for equity funds. On debt funds, fund advisors get their commission only in the form of trail commission

Calculation of Trail Commission

Trail Commission: - Daily product * Rate/100 * 1/365

Daily product = Balance units * Cumulative NAV

For example, Broker X procures 1, 00,000 units on 1^st January 2010 and the rate of commission is 0.50 % p.a. payable monthly and the investor redeems 50000 units on 15^th March 2010. Cumulative NAV (addition of all the NAV from 1^st of the month to the end of the month) is Rs.1500.00 in January, Rs.1256.54 in February and Rs.624.00 in March (cumulative up to 14^thMarch) and Rs.598.24 from March 15^th to 31^st.