MFs asset base from smaller cities up 44% at Rs 3 lakh crore

New Delhi: Contribution of the country's smaller towns -- known as beyond-15 cities (B15) -- to mutual funds' asset base surged 44 percent to Rs 3.07 lakh crore by February-end due to investor-friendly initiatives by Sebi.

Mutual Funds' assets under management (AUM) from B15 locations grew from Rs 2.13 lakh crore in February 2016 to Rs 3.07 lakh crore at the end of the last month.

In the last 12 months, assets from such towns have grown due to investor-friendly initiatives by the markets regulator Sebi and campaigns by asset management companies (AMCs), ICRA said in a note.

Currently, B15 accounts for 16.7 per cent of the total assets of the industry. The share of direct plans in B15 towns is 23.4 per cent against 46.2 per cent in T15 cities.

B15 cities are those which are beyond these top 15 cities -- New Delhi (including NCR) Mumbai (including Thane & Navi Mumbai), Kolkata, Chennai, Bangalore, Ahmedabad, Baroda, Chandigarh, Hyderabad, Jaipur, Kanpur, Lucknow, Panjim, Pune and Surat.

Together, all 43 mutual fund houses manage assets worth Rs 17.9 lakh crore. This was 42 percent higher from Rs 12.6 lakh crore managed by the industry in February last year.

Equity funds witnessed net flows of Rs 6,462 crore in February compared with Rs 4,880 crore in the preceding month. This was the 11th consecutive month of net inflows.

"Retail participation in this category is high due to steady inflows vide the Systematic Investment Plan (SIP) route," the report noted.

Equity AUM rose 46.6 per cent year-on year to Rs 5.2 lakh crore in February this year. So far, total inflow in the category has been Rs 62,151 crore and the segment is poised to end the fiscal on a high note because of attractive valuations and investors looking for equity tax-saving options.

A total of 6.1 lakh folios added last month, of these, 4.9 lakh folios came from the equity and equity-linked saving schemes.

"The industry's folio growth is not keeping pace with AUM growth, which suggests that there is a huge untapped market. The MF industry needs to evolve further and devise innovative means to attract more investors," the report noted.