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APRESENTATION

ONAMFI

FUND DISTRIBUTION AND SALESPRACTICES CURRICULAM

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Who can invest in mutual fundin 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

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Types of distributionchannel

1. Individual agents as distributors newly recruited individual distributors Existing individual distributors Employees of mutual fund

2. Distribution companiesSub brokers, banks .

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3) Bank & NBFC(private, public, foreign)

4) Post offices

5) direct marketingMutual sell their own product without use of any

intermediatories .

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Relevance of sales practices

Sales practices usually arise fromconvention but may also be mandated by

regulators.

Sales practices cover such areas asdistributor commission, before sales andafter sales service from funds to investoretc.

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Sales practices in Indianmutual fund market

Commission ratesThere are no rules prescribed for governing the

minimum or maximum commission payable by

a fund to its distributor.Commission rate for equity scheme range from1.5% to 2.5%,For debt funds between0.25% to 1.25%.

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Contd

SEBI regulation All initial issue expenses including brokerage paid

todistributor are limited to 6% of resources raised

under the scheme. In addition, SEBI regulated open-end funds are

Authorized to charge the investors entry & exitload to cover the fund distribution expenses.

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Contd...

Market practiceSome funds pay the entire commission up-front toThe 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 .

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Contd

Investor servicingdefine the role & responsibilities of its distributors. from aninvestors perspective the distributors services are limited to thesale of mutual fund units.Following practices for effective selling of mutual funds by

distributors:- Distributors should be fully aware of the importantcharacteristics of the schemes that they are selling.

Understand the each clients needs with respect to theirinvestment objective, risk tolerance return expectation.

Distributor must seek from clients, the commitment to invest.

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Sales Practices-Norms forMutual Funds

SEBI Advertising codeMeasuring, evaluating fund performance.

1. The code protects investors from misleadingadvertising by Specifying norms for computingreturns, management capability & comparisons

that may be contained in advertisements.

2. The code classifies advertisement into twocategories one that contains basic in formationregarding an existing scheme Performance.

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Contd Terms of appointment of

DistributorsThe distributor will provide to the customer a copyof the key information memorandum & make availablefor inspection, a copy of the full offer document.

AMFI code of Ethics Management of the fund ought to be in the interestOf unit-holders. High standards of service are expected from the funds.

Adequate disclosure by the funds ought to be made to unit-holders& trustees.

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PRESENTED BYHarpreet kaurKuldeepNitesh porwalVishnu patel