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Highlighting the earnings potential of MFDs, AMFI estimated that MFDs may earn Rs.6.59 lakh per annum if they build their AUM to Rs.10 crore in 5 years.
This was highlighted during the launch of AMFI’s new initiative titled ‘Mutual Fund Distributor Karein Shuru?'. The initiative aims to enhance the status of MF distribution and establish it as a lucrative business opportunity.
Citing an example, AMFI said that if an MFD gets lump sum investment of Rs.5 lakh per month in the first year, Rs.10 lakh per month in the second year, Rs.15 lakh per month in the third year, Rs.20 lakh per month in the fourth year and Rs.25 lakh per month in the fifth year, MFDs can build AUM of Rs.10 crore in five years to earn trail income of Rs.6.60 lakh per annum.
AMFI has considered assets composition of 70:30 between equity and debt and trail commission of 1% from equity and 0.25% from debt. The industry body has considered market appreciation of 7% in equity markets and 3% in debt markets to calculate the earnings of MFDs.
If we compare the fifth-year earnings with the first-year earnings, MFDs have seen 25X growth in their income, highlighted AMFI.
Further, AMFI said that MFD incomes have grown by 16X over the past 20 years due to market appreciation. On the other hand, a salaried individual has seen only 4X growth in his income.
