The commission is generally lower in debt-oriented funds but it's not the case for every scheme. There are some schemes like dynamic bond fund, income fund (medium to long duration fund), regular savings fund (conservative hybrid fund) and strategic debt fund (medium duration fund) that offer attractive commission rates.
According to a public disclosure on schedule of commission available on an MNC bank’s website, the trail commission offered by these schemes is over 1%. However, the case is not the same with all AMCs. Only a few AMCs offer over 1% commission on these schemes.
|
Scheme category |
Highest commission |
|
Regular savings fund |
1.30% |
|
Income fund |
1.00% |
|
Bond fund |
1.15% |
|
Dynamic bond fund |
1.15% |
|
Strategic debt fund |
1.05% |
As per a senior executive of a top AMC, the commission rates mostly depend on the expense ratio being charged by the scheme. "The commission directly depend on the expense ratio. It's lower in case of short term funds as the expense ratio is low and higher in case of longer duration funds as the expense ratio is higher," he said.
Commissions also go up when an AMC is looking to promote its scheme and increase inflows, he added.
In general, the commission ranges from 0.2% to 0.7% in case of shorter duration funds and 0.4% to 1% for longer duration funds.
