Mutual funds (MFs) might no longer be the product of choice for large distributors such as banks, after the regulatory order for a shift to trail commissions.
The Securities and Exchange Board of India had in a circular dated October 22 introduced a slew of changes aimed at bringing transparency in expenses, reducing of portfolio churning and mis-selling. This was one of the objectives in the scrapping of upfront commission.
While several independent financial advisors (IFAs) had shifted to the trail model of receiving commissions over recent years, large banks and national distributors (NDs) were still being compensated through upfront commissions for