{"id":26986,"date":"2026-05-09T10:59:57","date_gmt":"2026-05-09T10:59:57","guid":{"rendered":"https:\/\/wp-api.pocketful.in\/blog\/?post_type=mutual-funds&#038;p=26986"},"modified":"2026-05-09T10:59:58","modified_gmt":"2026-05-09T10:59:58","slug":"trail-commission","status":"publish","type":"mutual-funds","link":"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/trail-commission\/","title":{"rendered":"What is Trail Commission in Mutual Funds?"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">When you buy a regular mutual fund, you do not pay a direct fee to the person selling it to you. Instead, the mutual fund company pays them a fee behind the scenes. This specific fee is known as a trail commission in mutual fund investing.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">We see many people looking for reliable ways to grow their wealth today. To do this properly, it is very important to understand the costs involved in your investments. Many new distributors look at structures like the nj wealth mutual fund distributor commission to understand how they can build a long-term business. This structure shows how earnings can grow steadily over the years.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So, you might ask, what is trail commission in mutual fund exactly?. It is not a one-time payment. It is a continuous payment that acts as a reward for the ongoing service the agent provides to you. In this blog, we will explain everything about trail commission.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/trail-commission\/#Meaning_of_trail_commission_in_mutual_fund\" title=\"Meaning of trail commission in mutual fund\">Meaning of trail commission in mutual fund<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/trail-commission\/#Who_Receives_Trailing_Commissions\" title=\"Who Receives Trailing Commissions?\">Who Receives Trailing Commissions?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/trail-commission\/#How_to_Calculate_Trail_Commission\" title=\"How to Calculate Trail Commission?\">How to Calculate Trail Commission?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/trail-commission\/#Use_of_trail_commission_in_mutual_fund\" title=\"Use of trail commission in mutual fund\">Use of trail commission in mutual fund<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/trail-commission\/#Advantage_of_trail_commission_in_mutual_fund\" title=\"Advantage of trail commission in mutual fund\">Advantage of trail commission in mutual fund<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/trail-commission\/#Disadvantage_trail_commission_in_mutual_fund\" title=\"Disadvantage trail commission in mutual fund\">Disadvantage trail commission in mutual fund<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/trail-commission\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/trail-commission\/#Frequently_Asked_Questions_FAQs\" title=\"Frequently Asked Questions (FAQs)\">Frequently Asked Questions (FAQs)<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\" id=\"h-meaning-of-trail-commission-in-mutual-fund\"><span class=\"ez-toc-section\" id=\"Meaning_of_trail_commission_in_mutual_fund\"><\/span>Meaning of trail commission in mutual fund<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">To truly grasp this concept, we need to look at how mutual fund distributors are paid. A trail commission is an ongoing payment made by the Asset Management Company (AMC) to the distributor. This payment continues every year until you decide to sell your investment. It is basically a small percentage of your total invested capital.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You might be wondering if this money is deducted directly from your bank account. The answer is no. This commission is built into the mutual fund&#8217;s Total Expense Ratio (TER). The TER covers all the costs of running the fund, and a small part of it is set aside to pay the distributor.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Years ago, agents received a big upfront commission as soon as you invested. However, the rules changed to protect investors. SEBI banned upfront commissions, and now the industry runs almost entirely on the trail model.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Below is a simple comparison to help you understand the difference between the two types of commissions.<\/p>\n\n\n\n<figure class=\"wp-block-table has-small-font-size\"><table><thead><tr><th class=\"has-text-align-left\" data-align=\"left\">Feature<\/th><th>Trail Commission<\/th><th>Upfront Commission (Now Banned)<\/th><\/tr><\/thead><tbody><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Meaning<\/strong><\/td><td>A continuous payment is made as long as the investment is held.<\/td><td>A one-time lump sum paid at the very beginning.<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Payment Timing<\/strong><\/td><td>Calculated daily and paid monthly or quarterly.<\/td><td>Paid instantly when the investment is made.<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Cost Location<\/strong><\/td><td>Embedded inside the fund&#8217;s Total Expense Ratio.<\/td><td>Not included in the ongoing fund expenses.<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Regulatory Status<\/strong><\/td><td>Actively encouraged and allowed by SEBI.<\/td><td>Banned by SEBI to prevent mis-selling.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-who-receives-trailing-commissions\"><span class=\"ez-toc-section\" id=\"Who_Receives_Trailing_Commissions\"><\/span>Who Receives Trailing Commissions?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Let us clear up a very common doubt. Who actually gets this money, and who is paying it. The person who receives the trailing commission is your mutual fund distributor or agent. They earn this reward for helping you set up your account and guiding you over the years.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But here is the interesting part. You do not pay them directly from your bank account. The Asset Management Company, or AMC, pays this fee. The AMC takes a tiny portion from the fund&#8217;s Total Expense Ratio to pay the agent. So, the fee is handled behind the scenes.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Read Also: <\/strong><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/what-is-expense-ratio\/\">What is Expense Ratio in Mutual Funds?<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-to-calculate-trail-commission\"><span class=\"ez-toc-section\" id=\"How_to_Calculate_Trail_Commission\"><\/span>How to Calculate Trail Commission?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">You might be curious to know how this fee is figured out. It is very transparent. The mutual fund industry uses a standard trail commission formula. The calculation happens every single day because the value of your mutual fund changes daily. Here is the simple formula: (Total Units Held x Current Daily NAV x Annual Commission Rate) divided by 365.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Let us look at a quick example. if,<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Amount invested: Rs 1,00,000<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Agent Commision: 0.75%<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Period: 365 Days<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Annual Commision = Rs 750<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The company adds up these daily amounts and pays the distributor at the end of the month or quarter. It is a small daily amount that grows organically as your wealth grows.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-use-of-trail-commission-in-mutual-fund\"><span class=\"ez-toc-section\" id=\"Use_of_trail_commission_in_mutual_fund\"><\/span>Use of trail commission in mutual fund<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">You might wonder why mutual fund companies use this specific payment system. Asset Management Companies use trail commissions primarily to acquire and retain retail investors. Mutual fund companies know how to manage money, but they need local distributors to reach investors in different cities. By paying a recurring fee, the company gives the distributor a strong reason to keep the client invested for the long term.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The commission rates vary widely depending on the type of fund you choose.Below is a table showing the current average commission ranges based on the fund category.<\/p>\n\n\n\n<figure class=\"wp-block-table has-small-font-size\"><table><thead><tr><th class=\"has-text-align-left\" data-align=\"left\">Mutual Fund Category<\/th><th class=\"has-text-align-center\" data-align=\"center\">Typical Annual Trail Commission Range<\/th><th class=\"has-text-align-left\" data-align=\"left\">Reason for the Rate<\/th><\/tr><\/thead><tbody><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Equity Funds<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">0.80% to 1.50%<\/td><td class=\"has-text-align-left\" data-align=\"left\">Higher risk requires more client guidance and behavioral coaching.<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Hybrid Funds<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">0.60% to 1.10%<\/td><td class=\"has-text-align-left\" data-align=\"left\">Moderate risk profile combining both equity and debt assets.<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Debt &amp; Liquid Funds<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">0.05% to 0.50%<\/td><td class=\"has-text-align-left\" data-align=\"left\">Low risk and highly stable, requiring minimal advisory effort.<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Index \/ Passive Funds<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">0.15% to 0.30%<\/td><td class=\"has-text-align-left\" data-align=\"left\">Funds simply track the market index, requiring very little management.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-advantage-of-trail-commission-in-mutual-fund\"><span class=\"ez-toc-section\" id=\"Advantage_of_trail_commission_in_mutual_fund\"><\/span>Advantage of trail commission in mutual fund<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The trail commission model brings several wonderful benefits to both investors and distributors. By focusing on long-term relationships instead of quick sales, this system creates a healthier financial environment. Let us explore the main advantages.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-medium-font-size\" id=\"h-for-the-distributor\">For the distributor,\u00a0<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Passive Income Generation:<\/strong> Distributors do not have to hunt for new sales every single day to survive.<\/li>\n\n\n\n<li><strong>The Power of Compounding:<\/strong> As the stock market naturally goes up over time, the total value of the clients&#8217; money goes up. This means the distributor&#8217;s income increases automatically without any extra work.<\/li>\n\n\n\n<li><strong>Low Setup Costs:<\/strong> Starting this business requires almost zero inventory and very little office space. You just need good knowledge and a phone.<\/li>\n\n\n\n<li><strong>Unlimited Growth:<\/strong> If an agent adds just two new clients every month with a Rs 10,000 SIP, they can eventually build a massive income of over Rs 30 lakhs annually.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading has-medium-font-size\" id=\"h-for-the-investor\">For the investor,\u00a0<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Behavioral Coaching:<\/strong> Your distributor acts as a coach, advising you to stay calm and stay invested during market falls.<\/li>\n\n\n\n<li><strong>Alignment of Interests:<\/strong> Because the agent&#8217;s income is based on your total fund value, their income drops if you lose money. They are highly motivated to pick good funds so your wealth grows.<\/li>\n\n\n\n<li><strong>Frictionless Payments:<\/strong> You never have to write a cheque to pay your advisor. The fee is handled automatically within the fund&#8217;s daily pricing.<\/li>\n\n\n\n<li><strong>Continuous Portfolio Reviews:<\/strong> Your advisor is paid to regularly check your investments and suggest changes if a fund stops performing well.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Read Also: <\/strong><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/best-mid-cap-mutual-funds\/\">Best Mid-Cap Mutual Funds in India<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-disadvantage-trail-commission-in-mutual-fund\"><span class=\"ez-toc-section\" id=\"Disadvantage_trail_commission_in_mutual_fund\"><\/span>Disadvantage trail commission in mutual fund<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">While the system has many good points, it also has some serious drawbacks. It is important to look at the disadvantages for both investors and distributors to understand the complete picture.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-medium-font-size\" id=\"h-for-the-distributor-0\">For the distributor,<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Market Volatility Risk:<\/strong> Since the commission is based on the total value of the funds, a sudden stock market crash will instantly reduce the distributor&#8217;s monthly income.<\/li>\n\n\n\n<li><strong>Regulatory Changes:<\/strong> Rules made by SEBI and AMFI change frequently. New rules often reduce the commission percentages, directly hurting the agent&#8217;s earnings.<\/li>\n\n\n\n<li><strong>Client Loss to Direct Platforms:<\/strong> Today, many investors prefer to manage their own money. Distributors face a tough challenge keeping clients from moving to modern direct investing apps.<\/li>\n\n\n\n<li><strong>Slow Initial Growth:<\/strong> It takes many years of hard work to build a large client base, and the income in the first few years is usually very low.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading has-medium-font-size\" id=\"h-for-the-investor-0\">For the investor<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>loss of compounding:<\/strong> Because the commission is deducted daily, it slowly eats into your profits. Over a short period of one or two years, a 1% fee might look tiny. However, over a 20 or 25 year period, this tiny fee becomes a huge amount of lost money.<\/li>\n\n\n\n<li><strong>Loss of Returns:<\/strong> You earn less money compared to direct mutual funds because of the higher expense ratio.<\/li>\n\n\n\n<li><strong>Conflict of Interest:<\/strong> Some agents might suggest an equity fund over an index fund just because the equity fund pays them a higher commission.<\/li>\n\n\n\n<li><strong>Paying for No Service:<\/strong> Sometimes, an agent helps you open an account and then never calls you again. You still end up paying them a fee every year for zero help.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Fortunately, there is a very simple solution to avoid these disadvantages. You can choose to invest in &#8220;Direct Mutual Funds&#8221; instead of &#8220;Regular Mutual Funds.&#8221; Direct funds do not pay any trail commissions, which means their expense ratio is much lower. All the saved money stays in your account and grows for your future.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Read Also:<\/strong>\u00a0<a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/high-return-mutual-funds-in-india\/\">Top 10 High-Return Mutual Funds in India<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-conclusion\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Understanding the costs behind your investments is the first step toward financial freedom. Trail commissions play a very important role in the Indian mutual fund industry. They give distributors a reason to guide you, support you, and keep you invested through the ups and downs of the market. For many people who need a financial coach, paying this small recurring fee is entirely worth it.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Whether you choose to work with a dedicated distributor or take the DIY route through a direct app, the most important thing is that you start investing. Stay patient, invest simply, and let compounding work for you &#8211; <a href=\"https:\/\/www.pocketful.in\/mutual-funds\">invest in mutual funds<\/a> with Pocketful.\u00a0<\/p>\n\n\n\n<figure class=\"wp-block-table has-small-font-size\"><table><thead><tr><th class=\"has-text-align-left\" data-align=\"left\">S.NO.<\/th><th class=\"has-text-align-left\" data-align=\"left\">Check Out These Interesting Posts You Might Enjoy!<\/th><\/tr><\/thead><tbody><tr><td class=\"has-text-align-left\" data-align=\"left\">1<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/best-thematic-mutual-funds-in-india\/\">Best Thematic Mutual Funds in India<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">2<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/types-of-mutual-funds\/\">Types of Mutual Funds in India<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">3<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/best-long-term-mutual-funds\/\">Best Long-Term Mutual Funds to Invest in India<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">4<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/best-sip-mutual-funds-in-india\/\">Best SIP Mutual Funds in India<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">5<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/debt-mutual-funds\/\">Debt Mutual Funds: Meaning, Types and Features<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">6<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/how-to-check-mutual-fund-status-with-folio-number\/\">How to Check Mutual Fund Status with Folio Number?<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">7<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/best-money-market-mutual-funds-in-india\/\">Best Money Market Mutual Funds in India<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">8<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/mutual-fund-fees-and-charges\/\">Mutual Fund Fees &amp; Charges in India<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">9<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/history-of-mutual-funds\/\">History of Mutual Funds in India<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">10<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/top-performing-mutual-funds-10-years\/\">Best Performing Mutual Funds of the Last 10 Years<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-frequently-asked-questions-faqs\"><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions_FAQs\"><\/span>Frequently Asked Questions (FAQs)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div class=\"saswp-faq-block-section\"><ol style=\"list-style-type:none\"><li style=\"list-style-type: none\"><h3 class=\"\">What is the meaning of trail commission in mutual funds?<\/h3><p class=\"saswp-faq-answer-text\">It is a recurring, ongoing fee paid by a mutual fund company to a distributor. It is paid as long as you keep your money invested in that specific regular mutual fund.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">What are the benefits of paying a trail commission?<\/h3><p class=\"saswp-faq-answer-text\">The main benefit is that you get continuous support from a financial advisor. They help you with paperwork and review your portfolio.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">How to use the trail commission calculation formula?<\/h3><p class=\"saswp-faq-answer-text\">The formula is very simple. You take the total units you hold, multiply it by the current daily NAV, multiply that by the annual commission percentage, and divide by 365.\u00a0<\/p><li style=\"list-style-type: none\"><h3 class=\"\">Who actually pays this commission to the distributor?<\/h3><p class=\"saswp-faq-answer-text\">The Asset Management Company (AMC) pays the distributor. However, the money ultimately comes from your investment.\u00a0<\/p><li style=\"list-style-type: none\"><h3 class=\"\">How can you avoid paying trail commissions?<\/h3><p class=\"saswp-faq-answer-text\">You can easily avoid this fee by investing in &#8220;Direct Mutual Funds&#8221; instead of &#8220;Regular Mutual Funds.&#8221;\u00a0<\/p><\/ul><\/div>","protected":false},"excerpt":{"rendered":"<p>When you buy a regular mutual fund, you do not pay a direct fee to the person selling it to you. Instead, the mutual fund company pays them a fee behind the scenes. This specific fee is known as a trail commission in mutual fund investing. We see many people looking for reliable ways to [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":27051,"parent":0,"menu_order":0,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[19],"tags":[],"class_list":["post-26986","mutual-funds","type-mutual-funds","status-publish","format-standard","has-post-thumbnail","hentry","category-mutual-funds"],"acf":{"freelancer":"Harjyot"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v20.13 (Yoast SEO v21.2) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What is Trail Commission in Mutual Funds? 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