Archive · 11 Aug 2026
Regular vs direct mutual funds: who earns the big commissions?
Imagine you want to buy a mutual fund, which is like a big basket of many different investments.
You can buy it through a helper called a distributor, or you can buy it all by yourself without a helper.
If you use a distributor, part of your money quietly goes to pay that helper, and you don't get a separate bill for it.
If you buy directly, no helper is involved, so the fund keeps more of your money and costs a little less.
A new report found that most of the money paid to helpers ends up with just a few very large ones.
About 77% of all helper payments went to only around 3,158 distributors.
Big banks and wealth management companies earned far more than small independent helpers.
Each big bank channel got about ₹126.60 crore on average, while individual distributors got only about ₹1.82 crore.
The report says regular plans are not automatically bad — it depends on whether you want help choosing and buying your fund.
Before you decide, ask how your helper is paid and check if a cheaper direct option exists.
A report found ₹21,106 crore (77.2%) of the mutual fund distribution commission pool went to 3,158 distributors, roughly 1.5% of the estimated 2.06 lakh registered distributors.
Direct plans carry no distribution commission and a lower expense ratio, while regular plans involve an intermediary and pay commission from the scheme's expenses.
Wealth managers and corporate distributors received ₹11,629 crore, banks and bank-associated brokers received ₹6,330 crore, and disclosed individual distributors received ₹2,689 crore.
The 50 bank and bank-associated channels averaged ₹126.60 crore each, compared with ₹1.82 crore for the 1,474 disclosed individual distributors.
Investors should check how their intermediary is compensated, whether a direct plan is available, and whether the intermediary is a mutual fund distributor or a SEBI-registered investment adviser.
- Who
- Mutual fund investors, distributors, banks, wealth managers, corporate distributors, fintech platforms, and individual distributors tracked by industry body AMFI.
- What
- A report revealing that mutual fund distribution commissions are heavily concentrated among a small number of large distributors, alongside a comparison of regular versus direct plans.
- When
- Not specified in the articles.
- Where
- Not explicitly stated; context such as AMFI, SEBI and rupee figures indicates India's mutual fund industry.
- Why
- Distribution commissions are deducted from a scheme's NAV, so investors do not receive a separate invoice; the report shows where commission money goes and what investors are effectively paying.
Direct Plans
Regular Plans
Costs and commissions
Direct Plans
Direct plans carry a lower expense ratio and pay no distribution commission, meaning less of the scheme's assets go toward expenses.
Regular Plans
Regular plans involve an intermediary and pay distribution commission from the scheme's expense structure, resulting in a generally higher expense ratio.
Investor support
Direct Plans
Investors manage their investments directly and are comfortable selecting and handling their own funds without intermediary help.
Regular Plans
Distributors can assist with transactions and fund selection, providing support that may justify the additional cost for investors who want it.
- Top distributors' commission share
- ₹21,106 crore (77.2% of pool) to 3,158 distributors (~1.5% of register)
- Below-threshold distributors
- ≈₹6,229 crore shared among ~2.03 lakh distributors
- Wealth managers & corporate distributors
- ₹11,629 crore
- Banks & bank-associated brokers
- ₹6,330 crore
- Fintech platforms
- ₹458 crore
- Disclosed individual distributors
- ₹2,689 crore (1,474 distributors)
- Average per bank channel
- ₹126.60 crore (50 bank/bank-associated channels)
- Average per individual distributor
- ₹1.82 crore