Small town mutual fund investors park 70% of money in equities
In July 2021, 25.33% of assets held by individual investors are from the B30 locations, and the remaining 74.67% are from T30
According to the latest July data released by Association of Mutual Funds in India (Amfi), 70% of the assets from B30 (Beyond 30) locations are in equity schemes, and the remaining 30% was concentrated in non-equity-oriented schemes. Moreover, the assets under management (AUM) for B-30 cities saw an increase of 2% to Rs 5.66 lakh crore in July 2021. When it comes to T30 (Top 30) locations, equity-oriented schemes accounted for 41% of assets in July 2021, and 59% accounted for non-equity-oriented schemes. T30 denotes India’s top 30 geographical locations, whereas B30 denotes locations outside the top 30. As of July 31, 2021, the Indian mutual fund industry had an asset under management (AUM) of Rs 35,31,853 crore.
As per the Amfi definition, equity-oriented schemes include equity and balanced funds. Whereas non-equity-oriented schemes include liquid and money market schemes and debt and debt-oriented funds.
Investor’s trend
In July 2021, 25.33% of assets held by individual investors are from the B30 locations, and the remaining 74.67% are from T30. Institutions that include domestic and foreign institutions and banks held assets of 5.46% from B30 locations, and the rest 94.54% from T30.
Individual assets are primarily distributor-driven as 58% of the assets of individual investors came from T30 cities and were brought from distributors. Whereas direct investments accounted 20% of individual assets, divided as 4% from B30 and 16% from T30.
Reduced transaction costs and simplicity of doing business are just a few of the reasons investors are shifting to direct plans. Additionally, there is a dearth of high-quality distributor services, which has resulted in investors shifting to direct mutual fund plans. If this trend continues, direct plans for T-30 cities’ AUM could surpass that of regular plans.
That said, also the majority of fintech mutual fund distribution platforms do not charge commissions and focus on direct plans with lower total expense ratios than regular plans.
As of July 31, 2021, the overall number of accounts (or folios in mutual fund parlance) stood at 10.55 crore, while the total number of folios in equity, hybrid, and solution-oriented schemes, where the majority of investment comes from the retail segment, was approximately 8.72 crore.