Thanks to rising market and healthy inflows in existing funds, India’s top 687 MF distributors now manage almost 40% of industry’s total AUM.
AMFI data shows that these distributors manages close to Rs.7 lakh crore as on March 2017. In FY 2015-16, top distributors managed AUM of Rs.6.07 lakh crore.
An analysis of commission paid to the top 687 MF distributors shows that the revenue of these distributors stood at Rs. 5000 crore last fiscal. In FY2015-16, the top 540 distributors earned Rs.3,658 crore. Experts attribute this increase in assets under advisory and commission payouts to market gains and steady inflows in equity funds.
While the BSE Sensex inched up by 4,350 points, or 17%, to close at 29,600 points, equity funds witnessed 30% growth in net inflows last fiscal. As on March 2017, equity funds recorded net inflows of Rs1.31 lakh crore while it was Rs1.02 lakh crore in the preceding fiscal. Equity funds include pure equity, ELSS, balanced funds and ETFs that tracks index.
Another factor that has contributed to the increase in gross commission is introduction of forward charge mechanism. In the 2016 budget, the finance minister of India had introduced the forward charge mechanism in mutual funds, paving the way for AMCs to pay gross commissions to distributors without deducting service tax.
The assets under advisory are an indicator of how much commission the distributor earns. For instance, the top distributors managed AUM of Rs.7 lakh crore and earned Rs.5000 crore (72 basis points of the assets under advisory).
Also, AMFI data shows that the number of distributors falling under the purview of SEBI criteria of ‘top distributors’ has increased to 540 in FY15-16 from 687 in FY16-17.
This is how SEBI defines top distributors – they have meet any of these four criteria – having presence in at least 20 locations, managing AUM of at least Rs.100 crore, received gross commission of at least Rs.1 crore and received gross commission of Rs.50 lakh from a single fund house.
