Like every year, AMFI (Association of Mutual Funds in India) released a yearly report on commissions earned by mutual fund distributors. In FY 2022-23, The commissions earned by the distributors soared nearly 16% YoY to over Rs.12,071 crores.
You can either use the regular plan or the Direct plan when investing in mutual funds. When investing in a regular plan, you have to pay commissions, which can be as high as 1% yearly on the invested amount, as long as you’re invested.
If you’re investing in a direct plan, you pay no such commissions; on Coin, we offer zero commission direct mutual funds.
For example, Over the past 5 years, SBI Bluechip fund would have given you 79% returns if you would have taken the regular plan, Whereas, the direct plan would have fetched you 86% returns.
As the corpus compounds, The 7% difference would start hurting as compounding works both ways i.e., even for commissions.
You can check this post by @Bhuvan , Where he explained in detail on how these extra commissions hurt investors in the long run as corpus grows
Commission earned by Mutual Fund distributors in FY 22- 23
Here’s a list of the top 20 mutual fund distributors and the commissions they earned:
| Name of the ARN Holder | Commission recd (Cr) |
|---|---|
| NJ IndiaInvest Pvt Ltd | 1,538.98 |
| State Bank of India | 905.46 |
| HDFC Bank Limited | 669.27 |
| Prudent Corporate Advisory Services Ltd | 583.04 |
| Axis Bank Limited | 542.25 |
| ICICI Securities Limited | 453.63 |
| ICICI Bank Limited | 397.82 |
| Kotak Mahindra Bank Limited | 297.28 |
| Anand Rathi Wealth Limited | 212.79 |
| Hongkong & Shanghai Banking Corporation Ltd. | 135.49 |
| IIFL Wealth Prime Limited | 123.64 |
| Standard Chartered Bank | 120.95 |
| Citibank N.A | 117.62 |
| Julius Baer Wealth Advisors (India) Private Limited | 111.10 |
| Bajaj Capital Ltd. | 102.40 |
| Bank Of Baroda | 99.82 |
| HDFC Securities Ltd | 96.69 |
| Geojit Financial Services Ltd | 81.72 |
| Wealth India Financial Services Pvt Ltd | 75.80 |
| Sapient Wealth Advisors And Brokers Pvt Ltd | 74.33 |
Fun fact
Top 20 distributors earn 56% of the entire mutual fund industry’s commission while Top 50 distributors make more than 65% of the industry’s commission.
As you can see, the commission income for the distributors especially the top ones is skyrocketing :
If you are new to investing in Mutual funds and all of this seems gibberish, Don’t worry, You can check out the following Varsity’s chapter on Mutual funds:
https://zerodha.com/varsity/module/personalfinance/
You can also share your queries and thoughts on this thread.