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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Fund Distribution and Channel Management Practices

Under SEBI's regulations on mutual fund distributor commissions, which of the following is a correct feature of how distribution costs are handled?

Entry load has been abolished, so nothing is deducted from the invested amount for the distributor. Commission is paid by the AMC from scheme expenses in regular plans. Any additional charge must be a separately agreed service fee, not an entry load.

  1. AUpfront commission may be paid by the AMC from the investor's invested amount as an entry load
  2. BDistributors may charge an entry load directly from investors on each purchase
  3. CCommission is paid by the AMC out of scheme expenses, and the distributor may be separately paid by the investor only for services where agreed, with no entry load being charged to the schemeCorrect
  4. DDistributors must not receive any commission at all in regular plans

Explanation

Since 2009 entry load has been abolished, so no entry load is deducted from the investor's amount. Distribution commission is paid out of the scheme's expense ratio in regular plans. The statements about entry load or no commission at all are wrong.

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