Each year AMFI releases data on all commissions paid to agents by all mutual funds, to distributors that meet any of:
- Manage more than 100 cr. Of assets
- Commissions of Rs. 1 cr. In total (all MFs) or Rs. 50 lakh from a single fund house
- Presence in 20 locations or more
What we have found after a multi-year analysis of this data is:
- Commissions go up marginally, AUMs too, but share of total mutual fund assets decline.
- Banks and financials continue to dominate commissions by a huge margin
- Many large agents including banks have lower assets under management (AUM) than the previous year
- Outliers: Axis Bank saw a whopping 698% increase in its AUM this year, while HSBC saw its ranking plummet from #3 to #10.
Commissions Aren’t Very Negatively Impacted By “Direct” Plans, but Commission Growth Slows
AMFI introduced “Direct” plans in January 2013, where investors could invest in the same plans and no commissions would be paid to agents. This has, however much the unhappiness of the agents, not impacted their commissions in a large way. Commissions haven’t gone down, but they haven’t gone up at the same pace.
As per data released by AMFI, the total commissions earned by MF distributors has gone up 8.1% to Rs. 2,582 cr in FY 2013-2014 from Rs. 2,389 cr in FY 2012-2013. This increase was markedly lower than the 26.76% jump that was seen last year.
This was despite a 3.7% jump in agent-managed AUM from Rs. 4.76 lakh cr last year to Rs. 4.94 lakh cr this year.
Since the disclosures are only provided for distributors qualifying above a certain limit, but the system is “top heavy” so these will form a bulk of total commissions paid.
Part of this can be attributed to the reduced number of large active MF distributors in the market. This number stood at 373 in FY 2011-2012, to 432 in FY 2012-2013 and then finally at 329 this year.
We will come back to a detailed breakdown of AUM later on.
The top 2 earners remain the same as last year:
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