Analysis of recent AMFI data shows that popular equity fund categories have seen lesser reduction in trail commission. In many cases, smaller schemes (AUM below Rs.1,000 crore) increased their trail commission compared to January.
We looked at ELSS, multicap, large and midcap, large cap and midcap funds and studied the change in trail between January 31, 2019 and May 20, 2019.
Note: we have arrived at trail commission by comparing the difference between TERs of direct plan and regular plan of the scheme. The actual commission payout may be different.
Here are the category-wise observations:
Multicap funds
Most schemes in this category saw an increase in trail commission. Of the 32 schemes analysed, trail commissions increased in 19. Five schemes – Canara Robeco Equity Diversified Fund, HSBC Multi Cap Equity Fund, IDBI Diversified Equity Fund, LIC MF Multicap Fund and Union Multi Cap Fund – increased their trail commission by more than 20 bps.
This category has become popular in the last one year. With mid and small caps correcting sharply, the general consensus among experts was that there were selective opportunities in the space. This fuelled interest in these funds. It may also have contributed to the more widespread increase in trail commission in this category.
To view trail commission comparison for multicap funds click on the icon below.
Large cap funds
Most large cap schemes reduced their trail commission post April. Of the 29 schemes analysed, only eight (most of them having AUM below Rs.1,000 crore) increased their trail commission. Among large schemes, only HDFC Top 100 Fund increased the trail marginally by 4bps. Union Largecap Fund, which has an AUM of Rs.238 crore, reported the highest increase in trail commission in the category (28 bps).
To view trail commission comparison for large cap funds, click on the icon below.
Mid cap funds
Like in the large cap category, trail commission in most mid cap funds too fell in May. Of the 23 schemes analysed only eight saw their trail commissions increase. Six of these eight schemes have comparatively small asset size. Tata Mid Cap Growth Fund increased the trail commission by a whopping 83 bps between the two dates.
To view trail commission comparison for midcap funds, click on the icon below.
Large and midcap fund
Of the 23 funds that were put under the microscope, 12 have increased their trail while the rest have reduced it. Like in the previous categories, increase in trail is more prominent among smaller sized schemes compared to their larger counterparts (AUM over Rs.1,000 crore). Among the top 10 schemes by AUM, two have increased their trail commissions - Canara Robeco Emerging Equities and DSP Equity Opportunities Fund have increased trail substantially by 27 bps and 11 bps, respectively.
To view trail commission comparison for large and midcap funds, click on the icon below.
ELSS funds
Similar to large and midcap category, 18 of the 36 ELSS funds increased their trail commissions. Axis Long Term Equity Fund, the largest fund in the category, increased its trail by 18 bps. Only two among the top 10 schemes by size increased their trail commission. Union Tax Saver Scheme and Quantum Tax Saving Fund recorded the highest increase in trail in the category.
To view trail commission comparison for ELSS funds, click on the icon below.
Overall, smaller funds seem to have increased trail commission in a bid to make them more attractive.
