Asset management companies cut distributor commission

Many of fund houses/ Asset Management Companies (AMCs) have started cutting commissions paid to distributors. Till now, two AMCs, IDFC mutual funds and DSP BlackRock Mutual Fund, have slashed commissions of their distributors. Experts opine that the move will benefit the investors.

Recently, DSP BlackRock reduced the charges for its tax saver fund in May 2018. It has also slashed the commission rates for equity schemes. At the same time IDFC Mutual Fund has also curtailed the brokerage paid to distributors by 15 bps. The brokerage paid to the distributor, depends on the category and location of the distributor.

These lower charges will benefit investors in many ways. The lower expenses can enlarge the returns apart from this the investors who had chosen the direct plans owing to lower expenses will also benefit from such decisions of the investors.

In the last month market regulator had slashed the additional expense charged by mutual funds from 20 bps to 5 bps. This is now been passed out to the distributors, but ultimately the investors will be benefited from the move.