Two new initiatives by Amfi ignite greater interest in MF distribution

24,000 new MF distributors join industry in 2022--that's 42% higher than 2021

The mutual fund (MF) industry's initiatives to strengthen its distribution muscle paid off in 2022 as close to 24,000 people took up the MF distribution licence last year compared to 17,000 in 2021. According to industry executives, the 42 per cent rate of MF distributor addition in 2022 was mostly a result of two new initiatives by the industry —  an internship scheme and an advertisement campaign called 'MFD Karein Shuru'.

In March 2022, the Association of Mutual Funds in India (Amfi) announced an internship programme to groom qualifying individuals as mutual fund distributors, with the aim of increasing the number of such distributors in the country and stimulating financial inclusion. In July, the industry body came out with a media campaign called ‘MFD Karein Shuru’ to establish MF distribution as a lucrative profession.

"The rising awareness about mutual funds is forcing professionals who are into financial product distribution to include MFs in their bouquet of offerings. Amfi's initiative to provide free training to interested candidates through the MFD karein shuru program also helped last year," said Himanshu Vyapak, Managing Director, Centre for Investment Education & Learning (CIEL).

"Amfi's campaigns helped create awareness. leading to more people taking up MF distribution as a profession," said Luv Kumar, Zonal Head, West Retail, LIC Mutual Fund.

According to Amfi data, the number of individual MF distributors is higher in the top 30 cities (T-30) than the rest of the country (B-30). As of December 31, 2022, there were 59,200 distributors in T-30 and 57,000 in B-30.

The total count of individual MF distributors stood at about 116,000 at the end of 2022 compared to 109,000 at the end of 2021. The net addition to the distributor count is lower than the new registrations due to non-renewal of some licences.

In 2020, the number of MFD registrations had plummeted to 4,700 due to covid. This is because the institute which conducts the qualifying examinations for MF distributors had suspended exams for the majority of 2020.

The growing number of MF distributors helped the regular plan of MFs take over the direct plan in 2022 in terms of growth in systematic investment plan (SIP) registrations. The year-on-year growth in new SIP registrations through direct plans came in at just 4.5 per cent in 2022 compared to 115 per cent in 2021 and 505 per cent in 2020. In comparison, SIP registrations via regular plans rose 19 per cent last year. It was the first year since 2020 when the growth in direct plan SIP registrations trailed that of the regular plans.

MF distributors sell the regular plan of MFs as it has a commission component. Direct plans, which offer no commission to the seller, are mostly sold by online investment platforms.