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Mutual Fund Distributor Commission Structure (2024)

Mutual Fund Distributor Commission

These professionals are knowledgeable about the particular advantages and characteristics of any mutual fund plan and stay up to date with the latest fund firms operating in the market. As a result, they assist investors in purchasing and selling units linked to various funds and possess a thorough grasp of mutual funds. Their main goal is to get people interested in investing by teaching them about mutual funds and various companies’ objectives. To put it briefly, mutual fund distributor commissions are how a distributor of mutual funds is paid for the services rendered to their clients.

A commission is paid to the distributor when an investor purchases their first units of a certain mutual fund. A commission that varies from 0.1% to 2% is earned by mutual fund agents based on several criteria. Wondering? Continue reading for a detailed explanation of the mutual fund distributor commission.

Mutual Fund Distributor Commission

Distributors of mutual funds do not get a fixed income like those in other professions. The value of the mutual fund agent commission is determined by three important factors.

  • The asset management company covers the cost
  • The mutual fund initiative
  • The city in which the distributor finds clients

Depending on the equity, debt, or hybrid component of the scheme, a mutual fund agent may get a return of between 0.1 and 2 percent for each successfully acquired unit.

The mutual fund distributor commission structure may be better understood by referring to the formula used to calculate the commission amount. All mutual fund firms incorporate distributor commissions in their expense ratios, which are calculated by aggregating similar charges like marketing and accountancy. A monthly commission is paid to the distributor or agent based on the amount of AUM.

Understanding the Types of Mutual Fund Distributor Commission

Mutual Fund Distributor commission differs based on several factors. Thus, they fit under the following categories:

  1. Trail commission
  2. Upfront commission.


  1. Mutual Fund Trail Commission

Incentives for mutual fund distributors to find customers outside of the top thirty cities—as determined by the Associations of Mutual Funds in India (AMFI)—are the main goal of a trail commission.

Trail Commission works in two divisions:

  • T-30 cities: These are the top 30 cities in India for mutual fund industry investors. This includes well-known cities like Mumbai, Kolkata, Bengaluru, Pune, and Chennai.
  • B-30 cities: Those that are not among the top 30 are often thought to have a lack of investment. Therefore, mutual fund companies are always searching for clients from these locations to diversify their client portfolios.

Mutual fund distributors are compensated according to the demand for their products.

T-30 city customers are compensated upon onboarding with a fixed or specified commission (no further incentives). Furthermore, this commission makes an effort to update the commission’s value every three months.

However, they receive Master B-30 incentive commissions for attracting clients from B-30 cities, which entitles them to additional benefits on top of the standard commission on each investment they make in the first year.

  1. Upfront Commission in Mutual Fund

Unlike trail commissions, upfront commissions do not go toward the total AUM. However, mutual fund institutions pay additional fees to distributors who convince investors to make daily SIP deposits in a range of mutual fund schemes.

How to Become a Mutual Fund Distributor?

A standardized exam must be passed at the start of the official procedure to become a mutual fund distributor, and registration with a mutual fund company is the last step. The actions to take are as follows.

  • National Institute of Securities Market (NISM) Exam: You must pass an official certification exam to be hired as a mutual fund distributor. You can visit the NISM website, fill out the registration form, and pay the ₹1500 registration cost. The website also offers study guides and a summary of the main question types that are anticipated on the test.
  • Await the results: After your exam appearance, you should receive the NISM certification if you receive passing results. Thirty days after the results are announced, you can pick up a tangible copy of this certificate. After obtaining the certification, it needs to be renewed every three years.
  • Register with the AMFI: By employing the NISM certificates, you may get a unique AMFI registration number and become an AMFI-accredited distributor of mutual funds. You can offer mutual funds and formally advise new market participants using this number. The goal of the entire process is to assist you become more acquainted with your distributor through the candidate evaluation.

Eligibility Criteria to Earn Mutual Fund Distributor Commission for Distributors 

Individuals or organizations that have registered as mutual fund distributors with the Association of Mutual Funds in India (AMFI) may receive commission payments. Individuals or companies must meet AMFI’s requirements to be eligible. These requirements frequently involve finishing the required certification courses, meeting the minimum educational requirements, and fulfilling the registration requirements. To successfully support investors in making educated investment decisions and foster the expansion of the mutual fund business in India, AMFI works to guarantee that distributors of mutual funds possess the necessary knowledge and abilities.


Distributors of mutual funds are free to choose how much mutual fund distributor commission they want to make and how many hours they want to work. Think of it as an entrepreneurial role where you may make decisions and increase sales by drawing in new clients. However, the role requires specific requirements exclusively. Above all, you should become knowledgeable about any recent advancements and acquaint yourself with the strategies employed by associated mutual fund companies.

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