Skip to main content

Share of mutual fund assets from smaller cities growing


Sector has been focusing on bringing more customers via the Systematic Investment Plan mode
One of every four rupees invested by individual investors in mutual fund (MF) schemes now belongs to people from beyond the top 15 cities (B-15 in sector parlance).
The Rs 20 lakh crore sector has been trying for participation from smaller cities and towns. As on June-end, about 26.2 per cent or Rs 2.5 lakh crore of individual assets came from B-15 places. A year before, it was Rs 1.6 lakh crore and made up 23.8 per cent of total individual assets. The latter was Rs 9.48 lakh crore at end-June, against Rs 6.8 lakh crore a year before.
The sector has been focusing on bringing more and more individual customers through the Systematic Investment Plan (SIP) mode. There are now 14.5 million SIP accounts, which stoke a sticky and consistent Rs 5,000 crore of monthly flow.
A Balasubramanian, chief executive officer (CEO) of Aditya Birla Sun Life MF, says, “It is the outcome of the efforts that are being undertaken by the industry in increasing the penetration of MFs beyond big cities. This growth would continue to do well, given the high focus. We aim to ensure MFs become part of the daily conversations among individuals.”
Sector executives say India’s smaller towns and cities have huge amounts of money. Due to lack of awareness about MFs and good financial advice, these could not be brought into the folds of the fund sector in a bigger way. Which, they say, is changing fast. And given the fact that other traditional investment avenues like gold, realty, land and banks’ fixed deposits (FDs) are fast becoming unattractive from a returns’ perspective, B15 will play the next role of higher growth of the MF sector.
Sundeep Sikka, chief executive officer (CEO) of Reliance Nippon MF, says: “Growth of B15 highlights that MFs are no more a big city phenomenon. It’s just a tip of the iceberg; there is tremendous potential to tap. As awareness and experience of investors improves, the industry would see much higher growth from these regions. Also, I am confident that post demonetisation, the flow of money into banking will find its way into funds.”
Already, interest rates on bank FDs are trending down. On savings’ balances, too, rates of interest are being cut to as low as 3.5 per cent. These developments have made investors search for avenues where returns are relatively better.
G Pradeepkumar, CEO of Union MF, says: “B-15 has a lot of potential to grow. In terms of number of retail folios, B-15 matches the top 15 cities but I believe the ratio can be 2:1 in favour of B-15 in the next three to four years."
The existing additional incentives to distributors if investors from B-15 are brought in have played a role. Further, several online innovations, much easier Know Your Customer (KYC) processes and advertisement campaigns have helped MFs to grow.
Currently, the top five cities — Mumbai, Delhi, Bengaluru, Chennai and Kolkata — contribute 71.5 per cent of all assets under management (AUM) of the fund sector. The next 10 cities, part of the Top-15, contribute nearly 13 per cent. These are Pune, Ahmedabad, Hyderabad, Baroda, Jaipur, Surat, Kanpur, Lucknow, Chandigarh and Nagpur.
The Business Standard, New Delhi, 10th August 2017

Comments

Popular posts from this blog

At 18%, GST Rate to be Less Taxing for Most Goods

About 70% of all goods and some consumer durables likely to cost less

A number of goods such as cosmetics, shaving creams, shampoo, toothpaste, soap, plastics, paints and some consumer durables could become cheaper under the proposed goods and services tax (GST) regime as most items are likely to be subject to the rate of 18% rather than the higher one of 28%.

India is likely to rely on the effective tax rate currently applicable on a commodity to get a fix on the GST slab, said a government official, allowing most goods to make it to the lower bracket.

For instance, if an item comes within the 12% excise slab but the effective tax is 8% due to abatement, then the latter will be considered for GST fitment.

Going by this formulation, about 70% of all goods could fall in the 18% bracket.

The GST Council has finalised a four-tier tax structure of 5%, 12%, 18% and 28% but has left room for the highest slab to be pegged at 40%. A committee of officials will work out the fitment and the council…

Coffee-Toffee, the GST Debate Continues

Hundreds of crores of rupees in the form of taxes ride on the exact categorisation of products Is Parachute hair oil or edible oil? Is KitKat a chocolate or a biscuit? Is a Vicks tablet medicament or confectionery? For the taxpayer and the tax collector, this is much more than an exercise in semantics -hundreds of crores of rupees ride on the exact categorisation.
As the government moves closer to rolling out the goods and services tax (GST) on July 1, many such distinctions are being debated so that no ambiguity remains. Not just that, the government is revisiting old tax cases that were lost over product categorisation, according to people with knowledge of the matter, presumably with a view to making sure that revenue collections can be maximised. “In the past, several tax officers had challenged some of the product categorisations, including those in the retail segment, but lost out in court or at appellate level,“ said one of the persons. “Now we have a chance to go ahead with speci…

Deposit gush:-CA Institute Bats for Special Audit