Do fund houses charge trail commission on NAVs of direct schemes?
- Vijay Zanvar
Direct funds do not involve intermediaries and thus eliminate all the charges which are paid to the distributors. Direct Plans do not charge trail commissions. Trail commission is the recurring or annual fee paid to your agent on an annual basis, for providing business to the fund house. It is calculated on a recurring basis on the assets routed thorugh the agent. Thus, agents benefit from rise in NAV or increase in sale of units. Trail commissions for equity funds range between 0.20 and 1 percent, and in debt funds it varies between 0.10 and 1 percent. Direct Plans do not charge these recurring fees and thus this fee is not deducted from your fund's NAV when you invest directly.