Nexus between AMCs and distributors and its impact on investor wealth

Harsimran Sandhu and Soumya Guha Deb

Economics Letters, 2024, vol. 244, issue C

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.

Keywords: Mutual funds; Distributor commission; Fund rating,AUM Growth; Performance (search for similar items in EconPapers)
JEL-codes: D14 D82 G18 G28 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:244:y:2024:i:c:s0165176524005123

DOI: 10.1016/j.econlet.2024.112028

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