I understand that SEBI has abolished the entry charges for mutual funds. I want to know whether the trail commissions are paid by the AMCs and does the investor get any benefit of that. Also, are the exit load charges paid to the distributor eventually?
-Tejas Shah
Trail commissions are paid by the AMCs, but investors don’t benefit even if they invest directly or no trail is paid on the money they’ve invested. After the abolishment of the entry load, most mutual fund companies do pay a sales commission. The exit load which is charged by the fund, primarily up to 1 per cent is recovered by the AMC, which is basically money spent already by way of sales commission.
This article was originally published on June 12, 2012.
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