Mutual funds are one of the several options that investors explore for investing surplus funds. In a deposit-dominated market like India it is important for mutual funds to be able to offer differentiated risk-rewards and gain shelf-space. With many seemingly similar offerings from multiple mutual funds unable to clearly communicate their superiority, a less informed investor may find it difficult to make a choice. This uncertainty leads to a weakened ‘pull’ for the product. On the other hand, in an open architecture distribution scenario, distributors are well aware of the differential incentive and brokerage structures across products. After the compensation norms.
