Small towns account for 16% of MF asset base; Maharashtra biggest contributor among states

The contribution of small towns or B30 cities to mutual fund industry’s average assets under management of over Rs 28 lakh crore stood at 16 per cent as of October-end, while state-wise Maharashtra remained the biggest contributor to the assets base, industry body Amfi said.

Since last few years, markets regulator Sebi has been pushing asset management companies to reach out to small towns for increasing their assets base. B30 (beyond top 30 cities) accounted for 16 per cent of the total industry Average Assets Under Management (AAUM) in October this year, and the balance was contributed by T30 cities, or the top 30 locations in India, the Association of Mutual Fund Industry (Amfi) said.

Assets from B30 locations increased to Rs 4.61 lakh crore as of October-end from Rs 4.47 lakh crore at September-end, a 3 per cent growth. “There has been a constant increase in investments from B30 locations. They have close to 27 per cent share in the overall equity assets held by individual and it is growing at a reasonable rate,” said Harshad Chetanwala of MyWealthGrowth.com.

“This is encouraging as investors across country should get the benefit of investing in instrument like mutual funds. Even the interest levels from these cities have been high to understand how mutual funds can help them in long term,” he added. B-30 locations tend towards equity schemes as 65 per cent of assets are from equity schemes, while same is 35 per cent for ‘Top 30’ cities.

About 15 per cent of the retail investors chose to invest directly, while 24 per cent of HNI assets were invested directly. “Besides, 47 per cent of the assets of the mutual fund industry came directly. A large proportion of direct investments was in non-equity oriented schemes where institutional investors dominate,” Amfi noted.

The mutual fund industry’s total AAUM shot up to Rs 28.34 lakh crore at the end of October from Rs 27.74 lakh crore at the end of preceding month. In terms of state-wise contribution, Maharashtra continued to be the biggest contributor (43.8 per cent) of the industry’s AAUM in October this year, followed by 8.4 per cent by New Delhi, 6.9 per cent each by Gujarat and Karnataka and 5.2 per cent by West Bengal.

Individual investors primarily hold equity-oriented schemes while institutions hold liquid and debt-oriented schemes.
About 68 per cent of individual investor assets are held in equity oriented schemes, on the other hand, 75 per cent of institutions assets are held in liquid,money market and other debt-oriented schemes.

In September, Sebi chairman Ajay Tyagi had said that attraction of mutual fund schemes has been skewed towards the urban centres. “We need to strive more to make mutual funds popular in areas beyond top 30 cities,” he had said.