On the trail of a robust mutual fund compensation structure
We need to move to a full trail model and capping of the upfront commission is a step along the way
Last week, the Indian mutual fund association set the cat among pigeons by announcing a number and a date. The circular dated 26 March 2015 put 1 April, that is today, as the day that the mutual fund industry will move to a cost structure that caps the upfront commission (the money that the seller of a mutual fund gets for vending the product) at 1% of the amount invested, and the trail commission (the money the vendor gets at the end of one year as a percentage of the value of the asset a year later) to be either level or decreasing over the years.
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