Distribution commission pool of mutual funds jumps 2.3x, shows data

The sharp spike in commission comes on the back of surge in the equity markets and sustained flows into equity MF schemes

The commission pocketed by entities distributing mutual fund (MF) products has jumped nearly 2.3x, from Rs 4,625 crore in 2020-21 to Rs 10,420 crore in 2021-22 (FY22), reveals data released by industry body Association of Mutual Funds in India.

During this period, the average assets under management for the industry grew 19.5 per cent, from Rs 32.1 trillion in the January-March 2021 quarter to Rs 38.4 trillion during the January-March 2022 quarter.

The sharp spike in commission comes on the back of a surge in equity markets and sustained flows into equity MF schemes.

“There are three main factors that have led to a surge in the commission pool — sustained inflows, growth in asset prices, and lack of any new changes to the commission structure.

In the preceding few years, regulatory changes, such as rationalisation of expense ratio, change from B15 to B30, had a suppressing effect on commissions,” said Subramanya S V, co-founder, Fisdom — an investment platform.

Benchmark indices had jumped nearly 18 per cent in FY22.

NJ IndiaInvest retained its No. 1 position, earning a gross commission of nearly Rs 1,300 crore in FY22.

State Bank of India ranked No. 2, with commission of Rs 735 crore, followed by HDFC Bank at Rs 581 crore, showed the data.

Bank-backed distributors accounted for 30 per cent of the commission pie.

The top 10 distributors also accounted for almost 30 per cent of the commission pie.