How much commission do brokers get from the sale of SIP mutual funds?

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Brokers typically get a commission of 0.5% to 1% of the investment amount for selling SIP mutual funds. However, the exact commission amount may vary depending on the AMC, the type of fund, and the city in which the investment is made.

For example, a broker might earn 0.5% commission on an equity fund SIP investment in a tier-2 city. On the other hand, they might earn 1% commission on an equity fund SIP investment in a top-30 city.

The commission is paid by the AMC to the broker as a one-time fee when the SIP is started. However, some AMCs also pay a trail commission, which is a small percentage of the investment amount that is paid to the broker on a monthly basis as long as the investor keeps their money invested in the SIP.

It is important to note that the commission that a broker gets does not affect the performance of the fund. The commission is simply a way for the AMC to compensate the broker for their services in helping investors choose and invest in SIP mutual funds.

Here are some of the factors that determine the commission that a broker gets:

  • The AMC: Different AMCs have different commission structures.
  • The type of fund: The commission for equity funds is typically higher than the commission for debt funds.
  • The city: The commission is typically higher in top-30 cities than in tier-2 cities.
  • The size of the investment: The commission is typically higher for larger investments than for smaller investments.

If you are considering investing in SIP mutual funds, it is important to compare the commission structures of different AMCs and brokers. You should also ask the broker about their qualifications and experience.

Here are some of the benefits of investing in SIP mutual funds through a broker:

  • The broker can help you choose the right funds for your investment goals.
  • The broker can help you set up and manage your SIPs.
  • The broker can provide you with ongoing investment advice.

However, there are also some potential drawbacks to investing in SIP mutual funds through a broker:

  • The broker may charge you a commission.
  • The broker may not be as impartial as a direct investment platform.
  • The broker may not have as much experience in investing as a financial advisor.

Ultimately, the decision of whether to invest in SIP mutual funds through a broker is a personal one. You should weigh the pros and cons carefully before making a decision. 


Please be aware that the commission structure may be updated, and it's essential to verify the current commission rates with the concerned mutual fund companies or distributors for the most accurate information.

 

Investors should always inquire about the commission structure and other charges associated with their investments before making decisions. SEBI has mandated transparency in disclosing commissions, and distributors are required to provide information to investors about the commission they receive for selling mutual funds.

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