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Nexus between AMCs and distributors and its impact on investor wealth

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  • Sandhu, Harsimran
  • Deb, Soumya Guha

Abstract

This study explores the relationship between AMCs and distributors in India, analyzing the effects of distributor commissions on mutual fund performance and AUM growth of equity funds. While commissions may temporarily boost AUM growth, they often lead to high-expense, underperforming funds, ultimately harming investors. Fund ratings, driven by performance, significantly influence AUM growth, but the negative impact of commissions on ratings can trigger a vicious cycle, hindering long-term growth.

Suggested Citation

  • Sandhu, Harsimran & Deb, Soumya Guha, 2024. "Nexus between AMCs and distributors and its impact on investor wealth," Economics Letters, Elsevier, vol. 244(C).
    • Handle: RePEc:eee:ecolet:v:244:y:2024:i:c:s0165176524005123
    DOI: 10.1016/j.econlet.2024.112028
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    References listed on IDEAS

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    More about this item

    Keywords

    Mutual funds; Distributor commission; Fund rating; AUM Growth; Performance;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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