June 07 , 2012
Broker or distributor in case of mutual funds is someone permitted to sell mutual funds - they are intermediaries in the purchase process. They are typically identified by the ARN stamp they affix on your mutual fund application. Your broker name also appears in any mutual fund statement you receive. At the very least, a broker would guide you through the application process, and also help you get timely statements.
A broker needs an empanelment from AMFI to start practising. But becoming a mutual fund broker is fairly straightforward, so there are over 50,000 brokers in India. In mutual funds, there is also no bar on which funds a broker can sell. He may recommend and sell some or all mutual funds.
A few points to note:
- A broker is not mandatory; you may invest in a mutual fund directly. Something like buying a shoe from a factory outlet rather than a retailer
- A broker typically makes some money when you invest, and also for the period you hold on to your investment. You and the broker may of course agree on an additional fee you pay him for any advice or other services rendered