The earnings of top distributors went up by 12% from Rs. 1,897 crore in FY12-13 to Rs. 2,119 crore in FY13-14.
Thanks to the 18% rise in industry’s assets under management, distributors earned more commissions in FY13-14.
An analysis of commissions paid by top ten fund houses shows that the commission payout to distributors went up 12% in FY13-14. The top ten fund houses paid Rs.1,897 crore in FY12-13 which went up to Rs. 2,119 crore in FY13-14.
The rise in commission was due to mark-to-market gains in equity funds, inflows in income funds and due to the overall rise in the total assets under management. The mutual fund industry’s assets under management went up 18% from Rs. 6.98 lakh crore in March 2013 to Rs. 8.25 lakh crore in March 2014.
While equity funds AUM went up 11% from Rs. 1.72 lakh crore in March 2013 to Rs. 1.91 lakh crore in March 2014, it was largely due to the 14% rise in BSE Sensex. The industry bore the brunt of redemptions to the tune of Rs. 9,268 crore in equity funds as investors rushed to book profits.
HDFC paid the highest commission (Rs. 426 crore), followed by ICICI Prudential (Rs.385 crore) and Reliance (Rs. 314 crore). HDFC, ICICI Prudential and Reliance collectively manage in excess of Rs. 3 lakh crore.
IDFC saw the highest jump in commission payout. It paid Rs. 86 crore in FY12-13 which went up to Rs. 120 crore in FY13-14, an increase of 40%. The rise in commission payout was partly due to the 25% jump in its AUM, from Rs. 32,886 crore to Rs. 41,349 crore during the same period.
|
AMC |
Commission paid in FY13-14 |
Commission paid in FY12-13 |
Change |
|
HDFC |
426 |
337 |
26% |
|
ICICI Prudential |
385 |
298 |
29% |
|
Reliance |
314 |
368 |
-15% |
|
Birla Sun Life |
247 |
199 |
24% |
|
FT |
201 |
184 |
9% |
|
Kotak |
127 |
105 |
21% |
|
SBI |
123 |
133 |
-8% |
|
IDFC |
120 |
86 |
40% |
|
DSPBR |
101 |
107 |
-6% |
|
UTI |
75 |
80 |
-6% |
|
Total |
2119 |
1897 |
12% |
Distributors are incentivized in two ways – upfront and trail. The trail income is proportionate to the quantum of assets managed by distributors. Commissions go up as assets under management rise and vice-versa.
The earnings of top distributors are rising steadily from the last two years. In FY2011-12, the top ten fund houses by assets had paid Rs. 1,295 crore which went up to Rs. 1,897 crore in FY12-13 and Rs. 2119 crore in FY13-14.
In its circular issued in August 2011, SEBI had asked fund houses to disclose the commission details of distributors who earn a commission of Rs. 1 crore across industry or those who have raised AUM of Rs. 100 crore across industry from retail and HNIs, excluding non-institutional category. Roughly 329 distributors fall under this ambit which include majority of the large banks, national distributors and IFAs.
With the expectations of the revival in economy and predictions of markets reaching new highs, the entire distributor community is looking to a rewarding year..
