Hinterlands in the lead: Little places, big paces in mutual fund growth

Small towns, big moves: B30 assets jump 23%, leaving T30 growth of 14% in the rearview

The growth of mutual fund (MF) holdings among individual investors in semi-urban and rural areas is expected to outstrip that in the top 30 (T30) cities for the third straight year in 2025. As of October, individual MF assets from beyond top 30 (B30) cities had risen 23 per cent, compared with a 14 per cent increase in T30 assets. 

This faster growth has narrowed the gap between B30 and T30 assets. The B30 share of individual assets under management (AUM), which stood at 25 per cent in 2022, has climbed to 28 per cent, according to industry data accessed by Business Standard. 

Individual investor assets provide a clearer view of trends, as overall MF figures are often skewed by large, uneven institutional flows. 

The recent expansion in B30 AUM has reinforced the industry’s efforts to widen its reach and broaden its investor base. That this growth has persisted despite equity market volatility suggests a structural shift in investor behaviour. 

Experts credit the trend to a combination of higher inflows and mark-to-market gains. 

Systematic investment plan (SIP) accounts, which drive most equity scheme flows, now outnumber those in T30 cities in B30 markets. While the average B30 account is smaller, the sheer number of accounts has increased their share of SIP inflows. In September 2025, SIP inflows into active equity schemes from B30 markets breached ₹10,000 crore.

 

Mark-to-market gains have also been higher in B30 assets, reflecting a greater equity tilt. “B30 locations are heavily weighted towards equity. Nearly 76.49 per cent of B30 assets are in equity schemes, 9.19 per cent in balanced schemes, and around 11.8 per cent in debt-oriented schemes. In contrast, T30 locations allocate 31.41 per cent of assets to debt-oriented schemes,” Icra Analytics observed in a recent report.

 

The starting base for B30 markets is also favourable. As of October 2025, individual investor assets were ₹13.5 trillion in B30 cities, compared with ₹35.5 trillion in T30 cities.

 

Experts, however, caution that B30 data is indicative rather than exact. Since the classification relies on addresses in the permanent account number (PAN) database, investors who have moved to larger cities but have not updated their PAN details may still be counted as B30 investors.