MFs' asset base from smaller cities up 47% at Rs 3.41 lakh cr

Contribution of smaller towns - beyond top-15 cities (B15) in industry parlance - to mutual funds' asset base surged 47 per cent to Rs 3.41 lakh crore by May-end due to investor-friendly initiatives by Sebi.

Mutual funds' assets under management (AUM) from B15 locations grew from Rs 2.32 lakh crore in May 2016 to Rs 3.41 lakh crore at the end of May 2017, according to latest data available with the Association of Mutual Funds in India (AMFI).

"Steps taken by markets regulator Sebi to increase penetration of mutual funds in smaller cities is paying dividend. Sebi allowed up to 30 basis points of extra expenses to be charged to a fund to incentives distribution of funds in B15 (beyond top 15 cities). This coupled with the increasing investor education programmes has resulted in increasing investor awareness and many first time investors from smaller cities are investing into mutual funds," Director of Fund Research at Morningstar Kaustubh Belapurkar said.

Currently, B15 accounts for 18 per cent 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.
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.

About 54 per cent of the assets from B15 locations is in equity schemes, while the same is 31 per cent for T15 assets.

About 26 per cent of assets held by individual investors is from B15 locations and 10 per cent of institutional assets come from such places.
On the other hand, institutional assets are concentrated in T15 locations, accounting for a little over 90 per cent of the total.

Further, about 9 per cent of the retail investors chose to invest directly, while over 17 per cent of HNI assets were invested directly.
"About 41.4 per cent of the assets of the mutual fund industry came directly. A large proportion of direct investments were in non-equity oriented schemes where institutional investors dominate," AMFI noted.

Together, all 42 mutual fund houses managed assets worth Rs 19.04 lakh crore at the end of May 31, 2017. This was 38 per cent higher from Rs 13.82 lakh crore managed by the industry in May last year.