Mutual Fund Investments : What is Upfronting
Commission?
Upfronting - or paying in advance - of trail fees was
also discouraged. But before it issued this advisory, mutual fund houses used
to pay high upfront fees and also pay the trail fees in advance.
Mutual Fund houses pay a certain amount of commission to
distributors.
Typically, they pay an upfront commission when you invest
in funds. Subsequently, they pay a trail fee.
According to rules laid down by the Association of Mutual
Funds of India (AMFI: the mutual fund’s industry’s trade body), funds can pay a
maximum upfront commission of 1%.
Distributors also earn the trail fee for as long as the
investor stays invested.
In March 2015, AMFI had capped the upfront commissions
that fund houses pay to distributors to 1%.
No comments:
Post a Comment