Small towns, big wins: Mutual fund AUM breaks the Rs 10 trillion barrier

B30 AUM SURGE MIRRORS SMALL TOWN GRIT: Lower base, higher equity driving growth

The mutual fund (MF) assets linked to smaller towns (B30, or beyond the top 30 cities) have increased by 43 per cent in the past year, outpacing the top 30 cities (T30) by a wide margin due to a greater equity tilt.

The B30 assets under management (AUM) surpassed the Rs 10 trillion mark for the first time in February 2024 and are now nearing Rs 11 trillion.

The T30 AUM has surged 37 per cent in the past year to Rs 46.67 trillion, according to data from the Association of Mutual Funds in India.

MF executives say the higher rise in B30 AUM is on expected lines, given the lower base and higher equity share compared to T30.

The MF investments from B30 are mostly retail, whereas the T30 AUM has a significant institutional share.

Retail investment mostly goes into equity funds, while institutions put their money into debt funds.

As of April 30, the T30 institutional AUM was Rs 20.4 trillion vis-à-vis Rs 1.7 trillion in the B30. They accounted for 44 per cent of the T30 AUM and 16 per cent of the B30 AUM.

The key equity market indices were up 25 per cent in the year ending April 2024.

The rise in AUM came on the back of both strong inflows and mark-to-market gains. Active equity raked in a net of Rs 1.8 trillion in 2023–24 (FY24) as the equity market rally brought in new investors and flows from across the country, according to distributors.

The strong inflows from B30 came despite the regulator suspending the extra incentive paid to B30 distributors at the start of FY24.