Fees only mutual fund distributors

Do fees-only mutual fund distributors exists or is there only commission model?

The distributors which work on commission model are selling regular plans of mutual fund schemes and not direct plans. But, they might still charge you a fee apart from the commission that they receive from the AMCs.

We charge a nominal fee (which is much lesser than what other distributors earn for direct plans) for the investments in direct plans through our platform as we do not receive any commissions from the AMCs.

faisr, are you from Zerodha coin?

Yes RahulN :slight_smile: I am managing the COIN platform

Ok, thanks! Appreciate your answer

@faisr, Can you please explain, if i investment money in regular fund only once and keep it for say 5 yrs, will i get returns-expense ratio of each yr out of the 5 yrs or the expense ratio of only 1st year ( as i have kept the investment for 5 yrs without adding to it.)

can you please explain how this expense ratio works?

Expense ratio is percentage of AUM charged as fees for managing the fund by AMC in one year.

This fees is charged on daily basis.

For example fund ABC have 100 crores AUM and expense ratio of fund is 2.

On daily basis fund will withdraw money
=(AUM * Expense ratio%) / 365

= (1000000000 * .02) / 365

= ₹54794.5/day

AUM changes everyday as people withdraw or deposit money so this figure also changes on daily basis.

:astonished: U mean daily NAV of my fund is after subtracting of above mentioned expenses if profit occurs and and after adding if loss occurs?

Daily NAV compensate the expenses, profit and loss.

how this Rs.54794.5/day will take effect in my investment…if i have invested 50k.

further can you tell me how the calculation can be done for a AUM of 10814 crs. whose reg fund expense ratio is 2.20% and direct fund ex ratio is 0.84%
how much can be saved if invested in direct fund?

So this expense is proportionate to your investment. In example of Rs. 54794.5/ day, AUM of fund was 100 crores. So, lets say if you invested 1 crore in that fund, then Rs. 547.945 is expense you bear.

Daily expense = ((AUM) * (Expense Ratio/100)) / 365

So effect on your investment is pretty straight forward. Higher the expense ratio, more you pay towards management and handling of funds.

Regular and direct have got same management, same everything but difference in the expense ratio is the commission to distributor.