Banks, national distributors skip mutual funds for insurance, PMS

Move follows regulatory diktat to reduce total expense ratio, shift to trail commissions

Mutual funds (MFs) are slipping down the ladder of choice for large distributors such as banks, with the regulatory diktat to reduce the total expense ratio (TER) and move to trail commissions taking a toll on distributors’ earnings.

Industry observers say these entities have reallocated part of their resources to products such as insurance, portfolio management services, alternative investment funds (AIFs), and corporate fixed deposits.

A large private sector bank, for instance, has told its relationship managers to reduce selling MFs and focus more on insurance products, including those of its sister concern.

“At least one-fourth of the effort of distribution channels that