Top distributors assets rise, commissions drop

The assets under advisory of the top 15 MF distributors increased from Rs. 2.31 lakh crore in FY14-15 to Rs. 2.80 lakh crore in FY15-16 due to robust inflows in both debt and equity funds. However, their commission income dropped by 30% or Rs. 839 crore from Rs. 2,788 crore to Rs. 1,950 crore during the same period.

Industry experts attribute the decline in commissions to the 1% upfront commission cap imposed by AMFI from April 2015. However, distributors expect their earnings to go up in the current fiscal (FY16-17) as their assets under advisory rise.

Fund officials say that the industry is moving towards trail model which is good for all stakeholders. “It (commissions) is not a drop. It is more of a onetime adjustment as the industry is moving towards trial model. The trail model is better for all stakeholders,” says Sarath Sarma, Executive Director & Head – Sales, IDBI Mutual Fund.

Distributors point out that the figures published by AMFI are gross commissions and their net earnings are less than this figure since they incur expenses on running their businesses.

Gross commissions of top 15 distributors

Among the top distributors, ICICI Securities AUA almost doubled last fiscal. “The last fiscal was very good for the industry as well as for us. A lot of large investors are using ICICI Direct platform to do SIPs. The technological ease provided by us to investors has helped us increase our assets under advisory,” says Vineet Arora, EVP and Head of Product & Distribution, ICICI Securities.  

ICICI Securities saw its AUA increase by Rs. 11,576 crore from Rs. 12,253 crore in FY14-15 to Rs. 23,829 crore in FY15-16, which was the highest growth among the top 15 distributors. However, its commission income fell from Rs. 159 crore to Rs. 111 crore during the same period.

Vineet says that the industry should not bother about the drop in commissions due to upfront cap. “It (decline in commissions) is transient. As the AUA increases our trail income will go up,” points out Vineet.

NJ India bucked the trend. While the top 14 distributors witnessed a decline in commission income, NJ India saw its earnings rise marginally by Rs. 23 crore from Rs. 303 crore in FY14-15 to Rs. 326 crore in FY15-16. Its assets under advisory increased by Rs. 18,050 crore to Rs. 23,943 crore during the same period. “While the last fiscal was good for us our AUA increased only marginally. Overall, it was a good year for the industry as we received healthy inflows in equity funds,” said Neeraj Choksi, Jt. MD, NJ India.

Assets under advisory of the top 15 distributors

Top distributors in terms of AUA

While HDFC Bank’s MF commission income declined by Rs. 68 crore last fiscal it continued to hold the mantle of being the largest distributor, both in terms of commissions earned and AUA managed by it. HDFC Bank’s MF AUA increased by Rs. 7,614 crore from Rs. 29,968 crore in FY14-15 to Rs. 37,582 crore in FY15-16, which was the second largest growth (absolute terms) in AUA after ICICI Securities.

Axis Bank stood at second position in terms of AUA ranking at Rs. 20,103 crore, followed by NJ India (Rs. 23,943 crore) and IIFL Wealth Management at Rs. 26,275 crore.

The assets under management of the industry grew from Rs. 11.86 lakh crore in April 2015 to Rs. 12.32 lakh crore in March 2016, shows AMFI data. This was largely on account of inflows in equity funds which received net inflows of Rs. 74,026 crore last fiscal.