A

PRESENTATION
ON
AMFI

FUND DISTRIBUTION AND SALES

PRACTICES CURRICULAM
Who can invest in mutual fund
in india
1) Resident including
• Resident Indian individual
• Indian companies
• Indian trust
• Financial institution
• Non banking financial institution
• Provident fund
2)Non Residents including
• Non resident Indian
• Overseas corporate body
3) Foreign entities
• FII registered with SEBI
 Types of distribution
channel

1. Individual agents as distributors

• newly recruited individual distributors
• Existing individual distributors
• Employees of mutual fund

2. Distribution companies
Sub brokers, banks.
3) Bank & NBFC
(private, public, foreign)

4) Post offices

5) direct marketing
Mutual sell their own product without use of any
intermediatories.
Relevance of sales practices

• Sales practices usually arise from

convention but may also be mandated by
regulators.

• Sales practices cover such areas as

distributor commission, before sales and
after sales service from funds to investor
etc.
 Sales practices in Indian
mutual fund market

• Commission rates
There are no rules prescribed for governing the
minimum or maximum commission payable by
a fund to its distributor.
Commission rate for equity scheme range from
1.5% to 2.5%,For debt funds between
0.25% to 1.25%.
 Contd…

• SEBI regulation
• All initial issue expenses including brokerage paid
to
distributor are limited to 6% of resources raised
under the scheme.
• In addition, SEBI regulated open-end funds are
Authorized to charge the investors “entry & exit”
load to cover the fund distribution expenses.
 Contd...
• Market practice
Some funds pay the entire commission up-front to
The distributor. (at the time of sale of units), while
others pay a part of it up front & the balance in phases.

• Distributor's obligation
Commission arrangement is between fund & distributor.
the fund is not answerable for the activities of the sub-brokers.
 Contd…
• Investor servicing
define the role & responsibilities of its distributors. from an
investors perspective the distributors services are limited to the
sale of mutual fund units.
Following practices for effective selling of mutual funds by
distributors:-
• Distributors should be fully aware of the important
characteristics of the schemes that they are selling.

• Understand the each clients needs with respect to their

investment objective, risk tolerance return expectation.

• Distributor must seek from clients, the commitment to invest.

 Sales Practices-Norms for
Mutual Funds
• SEBI Advertising code
Measuring, evaluating fund performance.

1. The code protects investors from misleading

advertising by Specifying norms for computing
returns, management capability & comparisons
that may be contained in advertisements.

2. The code classifies advertisement into two

categories – one that contains basic in formation
regarding an existing scheme Performance.
 Contd…
• Terms of appointment of
Distributors
The distributor will provide to the customer a copy
of the key information memorandum & make available
for inspection, a copy of the full offer document.

• AMFI code of Ethics

• Management of the fund ought to be in the interest
Of unit-holders.
• High standards of service are expected from the funds.
Adequate disclosure by the funds ought to be made to unit-holders
& trustees.
PRESENTED BY
Harpreet kaur
Kuldeep
Nitesh porwal
Vishnu patel