How much is Mutual Fund Distributors Commission Income (2023)?

When you invest in regular plans of mutual funds, then you pay a commission to your mutual fund agent (or distributor). But do you know how much Mutual Fund Distributors earn in Commissions in India (2023)?

That is, what is the commission paid to mutual fund agents?

The commission is the major source of income for mutual fund agents.

And in this article, I would give you a broad idea of how mutual fund agents are compensated and how much is distributor commission in mutual funds.

As you already know, these regular plans have a higher expense ratio, which is used to pay commissions to mutual fund distributors. This is the reason why regular plans are costlier than commission-free direct plans. Do check the exact difference in expense ratio of direct vs regular plans.

Let’s see how much is MF Agent’s commission.

What is Trailing Commission in Mutual Funds?

When you invest in mutual funds via a distributor, agent, broker, or bank then they are paid a commission by the AMC. And this commission is paid every year and hence, called the trailing commission.

How much is the trailing commission paid to MF distributors?

It varies from one fund house to another and also depends on the scheme. Each AMC has its own commission structure for paying commissions to distributors and has also varying percentages of commissions for different categories – debt, equity, hybrid categories, etc. But generally, you can consider it to be about 1-1.5% for equity funds though in many cases, it might be higher as well. For debt funds, the figures are lower.

The AMCs pay the commission amount based on the total AUM (Asset Under Management) that the agent has with the AMC, which is calculated on an annual basis (including all SIPs & lump-sum investments) but paid to the distributors on a monthly basis.

So mutual fund distributor commission structure 2023 varies across AMCs and schemes. Let’s take an example to understand this.

Suppose your agent has 200 clients with each having an average investment of about Rs 20 lakh, then the total assets under management for him is 200 x Rs 20 lakh = Rs 40 Crore. And using the 1% approximation, your agent will earn about Rs 40 lakh (which is 1% of the Rs 40 Cr assets he has).

But how much do you end up paying in commissions to your mutual fund distributors?

Let’s again take an example to understand this.

Suppose you invest Rs 50,000 via monthly SIP that earns about 12% average annual returns. So the commission paid to the mutual fund distributor that he will get at the start of each year would be approximately as follows:

  • Year 1 – Nil
  • Year 2 – Rs 6-7,000
  • Year 3 – Rs 14-15,000
  • Year 4 – Rs 22-23,000
  • Year 5 – Rs 32-33,000
  • Year 6 – Rs 42-43,000
  • Year 7 – Rs 54-55,000
  • Year 8 – Rs 67-68,000
  • Year 9 – Rs 82-83,000
  • Year 10 – Rs 99-100,000
  • Year 11 – Rs 1.18 lakh
  • Year 12 – Rs 1.39 lakh
  • Year 13 – Rs 1.62 lakh
  • Year 14 – Rs 1.88 lakh
  • Year 15 – Rs 2.18 lakh

These are approx. figures based on the 1% commission thumb rule. The actual payouts may be higher. So this is how much commission mutual fund agent gets each year, when you invest in regular plans with them.

And please understand that not only does the fresh investment every year earns commissions for the agent. Your old existing investment with him also generates commission at the same rate (as a fresh investment) year after year till you keep money with him.

So if you had a question about – How long is the trail commission paid to the mutual fund distributor? Then the answer is that it is paid till the money remains invested, year after year. So the same money you invest once keeps generating recurring annual commission income for your mutual fund agent year after year like!

And if you had any doubts about commission on SIPs, then let me clear that too. Do agents get commission on SIP? Yes, they do.

So that is about mutual fund agent commission structure in India (2023) or mutual fund distributor commission structure in India (2023). As you can make out from the above, the commission starts small but increase drastically over the years.

By the way, the trailing commission is not already factored into the fund’s expense ratio. It’s the AMC (fund house) which will be paying this to the agents or distributors.

The mutual fund agent commission also depends on which city the investor is based in. There is extra incentive if the investor is from a smaller city. The city-wise commission structure is based on differences in T30 and B30 cities by AMFI, which stands for Top 30 and Beyond-30 cities of India respectively.

Every year, AMFI publishes its AMFI Commission Disclosure Report which lists the commission income of distributors in India. It has all the details of agents whose commissions exceed Rs 1 crore, or distributors whose commission from a single AMC exceeds Rs 50 lakh, or those who operate in more than 20 locations.

You can check this latest AMFI commission disclosure to know more.

One look at the mutual fund distributors’ commission earnings and you will be surprised how much this 1% commission ends up making for them.

You might also want to check how much your mutual fund agent makes every year with commission income. You might be surprised.

You can also check your CAS statement that is sent to your registered email every month to see what commission is paid to your mutual fund agent for each regular scheme you invest in.

A client, who earlier used to invest in regular plans through a distributor asked me whether there might be a conflict of interest in what mutual fund agents recommend. That is a possibility if the agent is pushing sales of schemes which gives higher commission to him. To not mince any words here, the commission structures of mutual funds can lead to a lot of mis-selling of schemes to investors.

Though AMFI in its recently announced AMFI’s MFD Code of Conduct tries to handle this aspect but there might always be a few who may make scheme recommendations to clients which helps them maximize their commission income–

How to Avoid Paying Commission on Mutual Funds?

If you invest in regular plans sold by distributors and agents, then you will end up paying commissions.

You don’t pay them directly but the NAV of regular plans is lower than direct plans as it has higher expense which is used to pay agents. That is, the difference in the NAV of direct and regular versions of a fund is mainly due to the commission paid to the intermediary in the case of regular investments.

So, to answer your question about How to Avoid Paying Commission on Mutual Funds, the simplest solution is to invest in direct plans.

When you do so, then there is no intermediary involved in the process and hence there is no commission paid to any broker or agent, i.e. Zero 0% commission in direct plans. By investing in the direct plan, you incur lower expenses (via a lower expense ratio), which helps generate higher returns in the longer run. It is for this very reason of no commission in direct plans that it’s always that direct plans give higher returns than regular plans of the same mutual fund schemes.

So that’s it on this topic of mutual fund distributors’ earnings.

I hope you now have a good idea about mutual fund distributors’ commissions in India (2023) and how much commission mutual fund agent gets. As an investor, over the year you end up paying lakhs of Rupees in commission for regular plans.

So to increase your returns and avoid paying commission, you can look at switching to direct plans in the near future.


  1. your views on direct plan higher returns is good however its very difficult for a common man to select proper plan and also to rebalance as per market movement. hence regular plans from a distributor has advantage of better schemes and better rebalancing as well as guidance on when to exit, transfer or withdraw.

  2. If an investor is an agent as well; can she select herself as an agent in regular investment? Will the 1% give more effective returns?

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