How does a mutual fund distributor earn?

How does a mutual fund distributor earn?

Commision Structure for Mutual Fund Agent (4.5\% to 10\%), Equity Mutual Funds will get you around (0.5\% to 2.5\%). Whereas, getting your clients to invest in Debt Funds will earn you around (0.2\% to 0.8\%).

Are mutual fund distributions a good thing?

It might seem like a good thing to receive a capital gains distribution, but there’s actually no positive economic value to the distribution. Assume you own 1,000 shares of XYZ Mutual Fund and you reinvest all capital gains and dividends.

How much do MF distributors earn their commission?

This commission structure range from 0.5\% to 1\% based on the mutual fund companies and is paid from your total net worth of asset under management. This will be paid to your agents even if you do not invest also but if your investment stayed without withdrawal.

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How much commission does a mutual fund distributor earn?

Typically mutual fund distributors earn around 1\% commission on the value of their clients’ equity schemes and 0.5\% on debt schemes. The sluggish growth in commissions stood in contrast to the huge rally in India’s equity market and hence mutual fund assets over the past year.

Who can distribute mutual funds?

A Mutual Fund Distributor may be an individual or a non-individual entity, such as bank, brokering house or on-line distribution channel provider. Register with Association of Mutual Funds in India (AMFI ) and obtain AMFI Registration Number (ARN).

What does it mean when a fund is distributing?

A distributing fund is a fund that will periodically, usually quarterly, distribute dividends to its investors. An accumulating fund is a fund that reinvests the investor’s dividends within the fund. In this case, even though the investor keeps the same amount of shares within the fund, those shares are worth more.

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Do mutual funds distribute dividends?

Mutual fund investors may take dividend distributions when they are issued or may choose to reinvest the money in additional fund shares. Mutual funds that receive any dividends from the investments in their portfolios are required by law to pass them on to their shareholders.

How does mutual fund distribution work?

When a mutual fund declares a distribution, the fund price drops by a similar amount, but you aren’t losing money as a result. You’ll receive the distribution in cash, which you may reinvest in additional shares of the fund. If the fund has been successful and the NAV is growing, that would be a good sign.