Why MF distributors haven't grown as fast as MF assets

may not be substantial. More than banning upfront, what possibly was more damaging to the product was the lowering of TERs. Asa country, our financial footprint isstill at the foothills given our potential. ‘Thismove wasmuch ahead of itstime.”

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The fall in income for distributors is expected to further slow down growth in the industry..

(ISTOCKPHOTO)

Before 2018, the maximum TER an equity scheme could charge was 1.75% when the assets were over $300 crore. A distributorwith an AUM of ₹20 crore distributing only one equity scheme ofa mutual fund with an AUM of over ₹50,000 crorewould get commissions of around 50 bps. So, on ₹20 crore, he earned Rs 10 lakh a year. After 2018, when the TER slabs were introduced, the same Rs 50,000 crore equity scheme was mandated to cut the TER to 1.05%, With the reduced TER, distributor commissions also shrunk. Thesame distributor in our example would get only 20 bps from the AMC.On the same ₹20 crore AUM, his earnings fell to Rs 4 lakh.