Mutual fund distributors are generally averse to their clients borrowing by pledging their holdings. But, with the values of equity schemes down in the wake of the recent sell-off, these brokers advise them to opt for the 'loan against mutual funds' facility in case of a fund crunch, instead of redeeming their units. For distributors, this helps them retain the clients' money in the mutual fund schemes, which is crucial for them to keep earning fees from the fund houses.
