Mutual Funds Distributor

Mutual Funds Distributor

Mutual funds are a relatively safer investment option as opposed to trading in stocks that are prone to high risks. This makes it a popular investment option for many early investors. A mutual fund distributor helps facilitate the sale of mutual funds schemes by bringing in potential investors to the mutual fund provider. 

Who are mutual fund distributors? 

Mutual fund distributors are organisations that act as an intermediary that helps potential investments buy and sell mutual funds schemes. They not only help them profit from their investment but also help grow their investment portfolio. They help mutual funds providers find investors who can help them raise cash for their projects or the company itself. They help facilitate the purchase, sale, trading and more, and earn a commission from the users for every sale, purchase and trade they make. 

Understanding mutual fund distributors 

Mutual funds distributors act as an intermediary between the investor and the mutual fund providers and aid in the sale and purchase of mutual funds schemes. For mutual funds provider to raise money, they need investors who will purchase their mutual fund schemes and mutual fund distributors to help find the investors. To find and convince an investor to invest in mutual funds, the mutual fund distributors have to provide them with reasons to invest. 

For that, they need to educate investors on how to achieve their goals and which mutual funds scheme they should invest in. Remember that there are different types of mutual funds and each of them has its unique set of benefits and risk factors. So, investors must be educated on the risk factors as much as they are educated on the benefits. Mutual fund distributors also must provide their investors with different investments to ensure they make the most sound investment choice. 

Eligibility of a mutual fund distributor 

For an individual to act as a mutual fund distributor, he has to pass a set of certain eligibility criteria. Here are some of the eligibility criteria for mutual funds distributors. 

• The agent serving as or under a mutual fund distributor must be 18 years of age or older. 

• The agent needs to have a graduation degree or at least a 3-year diploma certificate. 
• The agent will also need to pass NISM V-A certification to become eligible for registration. 
• If the agents manage to pass the NISM certification test, they can now register and get the ARN number along with the EUIN number. 
• The agents will then need to get empanelled from any Asset Management Company and then they will be set to go. 
• The empanelment from Asset Management Companies can be done both online and offline. 

• Also, the NISM certification is only valid for a period of 3 years and after that, the agent will need to reappear for the certification exam. 
• Even before the 3-year period is over, agents can get de-registered if they fail to follow the code of conduct or their distributor is indicted for a serious offence, among other things. 

Responsibilities of a mutual fund distributor 

Here’s a set of duties and responsibilities that every mutual fund distributor must adhere to 

• They are to present potential investors with all possible mutual fund schemes. 

• Educate investors on the effectiveness, benefits and risk factors involved in every mutual fund scheme. 
• Help investors differentiate mutual funds from other investment options such as equity shares, bonds, FDs, and more. 
• Help investors by guiding them on how to regularly check how their investment performs in the current market. 

Frequently Asked Questions