The question regarding how disclosing distributor commission to investors in mutual funds will affect their behaviour continues to split the industry down the middle.
Move towards transparency
In order to increase transparency in the industry, the Securities and Exchange Board of India (SEBI) mandated all mutual funds to disclose how much they pay as way of incentives and commission to distributors in the new Consolidated Account Statement (CAS) format.
From October 1, the CAS gave details on the gross commission paid to distributors for the half-year period against the investor’s total investments in each MF scheme. ‘Commission’ includes not just direct monetary payments but also gifts, trips, event sponsorships, etc. This is in addition to details of the investment, the number of units held by the investor in different schemes of the AMC and their current value.
