Commission payout by top 10 mutual funds up 14% in FY23, shows data

Sustained rise in flows via SIPs lifts distributor share in AUM

The commission paid out to distributors by the top 10 fund houses surged 14 per cent in 2022–23 (FY23) to Rs 8,807 crore, as a sustained rise in flows from the systematic investment plan route lifted distributors’ share in the assets under management (AUM). This information is according to the commission disclosure reports released by mutual funds (MFs). The surge in commissions and average assets were higher than the overall growth in the AUM.

In FY23, SBI MF recorded an 11 per cent growth in AUM, but the commission payout rose 22 per cent. For the overall industry, the figure stood at 5 per cent. This indicates that distributors may have gained a higher share of MF AUMs vis-à-vis direct MF platforms in a year when MF performances were muted due to a sideways market.

SBI, UTI, and HDFC saw the highest rise in their commission outgo in the range of 18-22 per cent. Their top distributor lists are fairly different, with only a couple of names — NJ India Invest and Prudent Corporate Advisory Services — featured in the top 10 for most fund houses. 

For most bank-sponsored MFs, the associate banking channel brought the highest business and hence drew the highest commission.

The banking channel remains the major source of investor acquisition for fund houses, given the reach and trust customers have in banks. Although the sponsor banks bring the highest amount of business to their associate MFs, they remain top distributors for other fund houses as well.