Indian rupee banknotes of various denominations (Photographer: Dhiraj Singh/Bloomberg)

Mutual Fund Asset Base From Smaller Cities Up 41% At Rs 3 Trillion In FY17

The contribution of the country's smaller towns, or beyond-15 top cities (B15), to mutual funds’ asset base surged 41 percent to Rs 3.09 lakh crore by March-end due to investor-friendly initiatives by SEBI.

Mutual funds’ assets under management (AUM) from B15 locations grew from Rs 2.18 lakh crore in March 2016 to Rs 3.09 lakh crore at the end of March 2017, according to latest data available with Association of Mutual Funds in India (AMFI).

“Steps taken by SEBI to increase penetration of mutual funds in smaller cities is paying dividend. SEBI allowed up to 30 basis points of extra expense to be charged to a fund to incentives distribution of funds in B15.

“This coupled with the increasing investor education programs has resulted in increasing investor awareness and many first time investors from smaller cities are investing into mutual funds,” said Kaustubh Belapurkar, director of fund research at Morningstar.

Currently, B15 accounts for 17 percent of the total assets of the industry. Besides, these locations have a better balance of equity and non-equity assets. Moreover, a large proportion of direct investments were in non-equity oriented schemes where institutional investors dominate.

“Investing through systematic investment plan (SIP) has helped a lot, adding to the convenience of investors. We do expect a solid growth in B15 towns in the next five years,” said Jean-Christophe Gougeon, director, Sharekhan.

B15 cities are those which are beyond these top 15 cities — New Delhi (including NCR), Mumbai (including Thane and Navi Mumbai), Kolkata, Chennai, Bengaluru, Ahmedabad, Baroda, Chandigarh, Hyderabad, Jaipur, Kanpur, Lucknow, Panjim, Pune and Surat. A total of 53 percent of the assets from B15 locations is in equity schemes, while the same is 29 percent for T15 assets.

About 25 percent of assets held by individual investors is from the B15 locations and 10 percent of institutional assets come from such places. On the other hand, institutional assets are concentrated in T15 locations, accounting for 91 percent of the total. Further, about 9 percent of the retail investors chose to invest directly, while over 16 percent of HNI assets were invested directly.

Together, all 42 mutual fund houses managed assets worth Rs 18.3 lakh crore at the end of March 31, 2017. This was 35 percent higher from Rs 13.53 lakh crore managed by the industry in March last year.