Some progress in MFs' outreach beyond top cities

Industry's investors' awareness drive helps crack hinterland

Mutual fund (MF) houses, often rapped by the Securities and Exchange Board of India (Sebi) for not looking beyond the top cities, finally have something to say on this count. Contribution from the top five cities to the sector's assets under management (AUM) has dipped to the lowest level in about two years.

Data from the Association of Mutual Funds in India (Amfi) show assets contributed from the cities of Mumbai, Delhi, Kolkata, Bangalore and Chennai declined to 72.9 per cent of the total, the lowest since March 2012. Since last December, their AUM contribution has dropped by 145 basis points.

To boost investor participation from small centres, Sebi had started providing extra incentives to fund houses since September 2012. However, penetration from beyond 15 cities had continued to remain low. Now, some results are being seen. AUM from beyond the top 15 cities contributed 13.65 per cent of the overall total at the end of the March 2014 quarter, compared to 12.97 per cent in the previous one.

Entities in the segment said their investor awareness initiatives were yielding results. “We undertook several such programmes, mainly in the smaller cities. It's the result of the industry's continuous hard work, along with Sebi's initiatives,” said a chief executive officer in the sector.

Amfi, on its new website, has also provided a facility for investors to know about the schedule for investor awareness programmes in their cities. Fund houses have also been trying other mediums to reach out, including TV and radio advertisements. Amfi has also introduced an initiative wherein fund houses voluntarily ‘adopt’ districts.

All these factors, collectively, have helped reach out to the untapped potential in India's hinterlands, said fund houses.

As of last month, the MF sector’s total AUM was Rs 8.25 lakh crore.