Distribution Channels & Channel

Management Practices
Traditional Distribution Channels
Individuals
Institutional Channels
Newer Distribution Channels
Internet
Stock Exchanges
PSU Banks
New Cadre of Distributors
Institutional channels build their reach through
employees, agents and sub-brokers.
AMCs keep exploring newer channels of distribution to
increase size of assets managed.
Internet has increased expectations of advice that
investors have from their distributors.
SE brokers have become a new channel for distribution
of MF. Need to pass the prescribed test, get the AMFI
Registration No. & get themselves empanelled with
AMCs whose schemes they want to distribute.
SEBI does not prescribe any limit on commission
payable.
Upfront commission shall be paid by Investors directly
based on the service rendered by the distributor.
AMC pays Trail commission to MF Distributors on a
Quarterly on Average Net Assets canvassed by the
distributor.
Since trail commission is calculated as a percentage on
AUM, distributors get the benefit of valuation gains in
market.
Scheme application forms carry a suitable disclosure to
effect that upfront commission to distributors will
be paid by the investor directly to distributor, based
on his assessment of Various factors including service
rendered by the distributor
When MF scheme has been in existence for more than 3
years:
1) Point-to-point returns on a standard investment of Rs.
10,000/- shall also be shown
2) Performance advertisement shall be provided in terms
of CAGR for the last 1 year, 3 years,5 years & since
inception along with Benchmark Index.
3) In case of money market schemes or Liquid schemes,
performance can be advertised by simple annualisation of
yields if a performance figure is available for at least 7
days, 15 days and 30 days
1. Institutional distributors build reach through
______.
a. Employees b. Agents
c. Sub-brokers d. Any of the above
2. The maximum initial commission that a scheme can
pay to distributors is ____.
a. Nil b. 0.05 percent
c. 1 percent d. 2 percent
3. The distributor can charge a fee from the investor.
a. True b. False
4. Stock exchange brokers are permitted to distribute
mutual funds without the requirement of passing the
certifying test.
a. True
b. False
5. Trail commissions are linked to valuation of portfolio
in the market.
a. True
b. False