Mutual funds asset base from small towns up 46% to Rs 4.1-tn
New Delhi: Contribution of the country's small towns to mutual funds asset base surged 46 per cent to Rs 4.1 lakh crore by November-end due to a spirited promotion campaign by industry body Amfi.
Mutual funds' assets under management (AUM) from B15 locations - small towns beyond top 15 (T15) cities - grew from Rs 2.81 lakh crore in November-end 2016 to Rs 4.1 lakh crore at the end of November 2017, according to latest data available with Association of Mutual Funds in India (Amfi).
"The consistent delivery of returns by the mutual fund (MF) industry, prudent risk management and increasing initiatives on enhancing investor awareness have all aided in such impressive growth in the industry," Kotak Mutual Fund CIO Equity Harsha Upadhyaya said.
Several factors including demonetisation, drop in interest rate on traditional assured return products such as fixed deposit; shift from physical to financial savings and Amfi campaign on 'Mutual Funds Sahi Hai' (Mutual funds are right), have helped in increasing the assets base, Anshul Saigal, portfolio manager at Kotak Mutual Fund said.
The spike in bank deposits and consequent decline in interest rates following demonetisation on November 8, 2016 have also helped mutual funds. Currently, B15 account for 18 per cent of the total assets of the industry.
About 58 per cent of the assets from B15 locations is in equity schemes, while the same is 34 per cent for T15 cities. B15 cities are those which are beyond the top 15 cities namely New Delhi (including NCR), Mumbai (including Thane and Navi Mumbai), Kolkata, Chennai, Bangalore, Ahmedabad, Baroda, Chandigarh, Hyderabad, Jaipur, Kanpur, Lucknow, Panjim, Pune and Surat. "About 9 per cent of the retail investors chose to invest directly, while 17.7 per cent of HNI assets were invested directly.
"Besides, 41.7 per cent of the assets of the mutual fund industry came directly. A large proportion of direct investments was in non-equity oriented schemes where institutional investors dominate," Amfi noted.
Overall, the assets base of the mutual fund industry, comprising 42 active players, stood at over Rs 22 lakh crore. Going ahead, Upadhyaya said similar healthy growth in AUM is expected to continue as the penetration levels are still very low.
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