Small centres pip metros in MF asset growth

AUM from B15 cities rise 56% against sector's growth of 24% in the past year

One out of every five rupees in the domestic Rs 12 lakh crore mutual fund (MF) sector now belongs to investors in smaller cities. Assets under management (AUM) from beyond the top 15 cities (B15 in sector parlance) are rising at over double the pace of overall segment since the Narendra Modi-led BJP government took charge in May 2014.

Growth of assets from the B15 centres grew 56 per cent from Rs 1.5 lakh crore to Rs 2.3 lakh crore between May 2014 and May 2015. In comparison, the overall sector assets grew 24 per cent and from Rs 9.9 lakh crore to Rs 12.3 lakh crore.

In other words, smaller towns contributed a third to the rise in industry assets over the past one year.

Interestingly, B15 locations have a better mix of equity and non-equity assets. Nearly 44 per cent of the assets from these centres are in equity schemes, up from 42 per cent in May 2014. In comparison, only 28 per cent of the assets from the top 15 cities are in equity-oriented schemes.

Overall assets from B15 cities is nearly 20 per cent of sector's total assets of Rs 12.26 lakh crore, up from 15 per cent last year.

Nimesh Shah, managing director (MD) and chief executive officer (CEO) of ICICI Prudential MF says, "There is an increased level of enthusiasm for distributing mutual funds in B15 cities. With the equity market generating superior returns, a reasonable breadth of B15 investors has been built."

The rise in contribution from B15 is a welcome sign for the sector, struggling for long to mobilise assets from these regions. Sector officials believe their next wave of growth would come from smaller towns.

Statistics from industry body - the Association of Mutual Funds of India (Amfi) suggest 24.2 per cent of all the assets held by individual investors are from B15. On the institutional side, the proportion is at 15 per cent.
 

Sundeep Sikka, CEO of Reliance MF and chairman of Amfi, says the B15 locations will be big contributors to the segment’s growth in the long term.

"The aim is to increase folios, along with sale of simpler products like systematic investment plans from these regions," he said.

PUTTING UP A GOOD SHOW

• B15 locations have a more balanced mix of AUM than T15
• Nearly 44 % of assets from B15 in equity schemes
• 28% of T15 assets in equity-oriented schemes
• 24.2% of assets held by individual investors is from B-15