In an effort to help the MF distribution fraternity in these trying times, five fund houses – DSP, Kotak, L&T, SBI and UTI have decided to release a portion of your trail brokerage in advance.
While DSP MF and SBI MF have paid off a portion of trail commission to distributors, L&T MF and Kotak MF will release advance trail brokerage on April 3, 2020. UTI MF have paid off a major portion of trail commisson on March 31, 2020. Currently, most fund houses pay brokerage on 10th of every month.
In an email communication to distributors, DSP MF said that the fund house would release 40% of the brokerage basis February on March 30, 2020. The fund house said, “We hope as some relief through this period of uncertainty. We are certain that together, we can get through this difficult time.”
Similarly, SBI MF has released 40% of the last month’s brokerage to distributors last Friday.
Kotak MF has decided to pay 50% of the last month brokerage on ad hoc basis.
L&T MF has announced payment of up to 60% of the last month’s brokerage to MF distributors. In a communication, the fund house said, “This is being done as a special case and once the actual brokerage file will be processed the shortfall or additional would be adjusted into the next cycle. Stay safe and be healthy.”
Meanwhile, UTI Mutual Fund has released entire trail commission accrued till March 24, 2020 to their distributors.
Mumbai IFA Paresh Shah believes that the move would help individual distributors with small and mid-sized assets to meet their living expenses, home loan, EMI etc.
Another Mumbai distributor requesting anonymity told Cafemutual that it is difficult for many distributors to meet recurring business and household expenses. He said, “I think one way to pay brokerage is to disburse trail commission on existing assets first and pay trail commission on incremental assets later. This will ensure that distributors will get at least some money to run their business.”
