You know about mutual funds, you know about investments, you know about so many things revolving around the same topic. How much do you know about a mutual fund distributor? If you do not know much about a mutual fund distributor, we are here to talk about them. We will tell you everything you need to know about them, their characteristics, the top MF distributors, and much more as we keep going. Buckle up, folks.
Who is a Mutual Fund Distributor?
A mutual fund distributor is a financial middleman who aids the investor to acquire and manage mutual fund investments. These distributors, who are also known as mutual fund agents have an important role in the distribution and sale of mutual fund products to retail investors. They can operate under the oversight and registration of SEBI and AMFI.
An AMFI distributor focuses on the importance of maintaining high ethical standards and integrity. Their services encompass investment advice, which assists clients in choosing the right mutual funds. This facilitates the purchase and redemption of fund units and offers ongoing support and guidance to investors.
Therefore, a mutual fund distributor commissions clients for the services that they provide. They are also known to bridge the gap between mutual fund companies and individual investors who want to construct a diversified investment portfolio.
Difference Between a Mutual Fund House and a Mutual Fund Distributor
A mutual fund house is an asset management company that manages assets and makes investment decisions for investors. A mutual fund distributor, on the other hand, is a financial middleman who assists investors in buying and selling mutual funds and making investment decisions.
An example of a mutual fund house is Groww, where you can invest in Groww MF.
An example of a mutual fund distributor is Upstox, which helps you buy and sell mutual funds.
How Does a Mutual Fund Distributor Work?
Mutual fund distributors, who are also known as mutual fund agents can help an investor buy, sell, and manage his mutual fund investments in the country. They act like a middleman between the mutual fund company, and the investor. They provide investors with investment advice, facilitate transactions, consider ongoing support, facilitate documentation and more.
In exchange for the above-mentioned services, they charge a percentage of commission, just like an insurance agent. The commission is calculated as a percent of the total value of the investment.
Role of Mutual Fund Distributors in 2024
Mutual fund distributors have an important role in the industry of mutual funds, as they assist in bridging the gap between mutual fund houses and investors. They perform various crucial roles, such as:
1. Giving Advice to Investors on their Investment
Mutual fund distributors could offer you personalized advice about your mutual fund investments, and they can analyze your risk tolerance, financial goals, and investment horizon to recommend the right mutual fund schemes in accordance.
2. Educational Resources for Investors in Mutual Funds
The mutual fund distributor has a vital role, as mentioned above, especially when it comes to educating investors on different kinds of mutual funds that are out there. This also includes their characteristics, benefits and risks. They help out in letting the investors understand how mutual funds work, and how to select the right schemes for an individual’s needs.
3. They Offer Support
Mutual fund distributors can offer ongoing support and guide you on your mutual fund investments. They could keep you entirely updated on the performance of your investments and assist you in making informed decisions throughout the journey.
4. Facilitating Transactions
Mutual fund distributors could assist you in buying and selling mutual funds, even switching to different mutual fund schemes, and you can redeem your investment.
Top Mutual Fund Distributors in India
Here is a list of MF distributors you need to know:
- Alice Blue
- ICICI Securities
- Kotak Mahindra Bank
- HSBC
- HDFC Bank
- State Bank of India
- NJ IndiaInvest
- Axis Bank
- Julius Baer Wealth Advisors (India)
- Standard Chartered Bank
Who Can Become a Mutual Fund Distributor?
AMFI tells us that there is a rigorous registration process, and there are a lot of conditions, such as a minimum age, an educational background, registration, identification, empanelment with AMCs, and code of conduct.
However, how does one become a mutual fund distributor in India? Read on as we tell you how.
Step 1: Pass the NISM-Series-V-A Exam.
Step 2: Get the AMFI Registration Number.
Step 3: Choose Your Distribution Channel, such as direct access to mutual fund companies or an online distribution platform.
Step 4: Offering investment services to clients.
Conclusion
A mutual fund distributor only earns through the commission you provide while buying and selling mutual funds; apart from that, they are always there to help you out, educate you and make the right kind of investment decisions.
