There is a good news for distributors. Most fund houses have been offering attractive trail commission to distributors post ban of upfront commission.
In fact, a few fund houses have been offering trail commission of 1.40% in the first, second and third year to distributors.
A Mumbai distributor requesting anonymity said that some large and mid-sized fund houses have been offering attractive rates to their select distributors.
Seconding his view, a CEO of an emerging fund house said, “Fund houses have revised their trail commission structure post ban on upfront commission. Many of them have been offering attractive commission to an extent of 1.65% in a few schemes to select distributors. However, this commission structure is until the time SEBI introduces TER slabs. Distributors should expect a cut of at least 0.25% post introduction of TER slabs.”
In a communication sent to distributors, a large fund house said, “We may change the rates of commission in case of change in regulations/load structure/expense ratio and any other factors which have an impact on such payments. Such change would be applicable for remaining SIP/STP installments also.”
Fund houses calculate trail commission from the date of the allotment until the end of the first year of investment or till the investor stays invested in the scheme on pro-rata basis. They take the average of NAV over this period to calculate your trail commission.
