Small cities boost mutual funds' asset base

Mumbai: A higher growth in investments from investors residing in smaller towns and cities has helped the mutual fund industry to grow its total assets under management (AUM) to an all-time high of Rs 16.46 lakh crores in 2016.

The assets under management from beyond top 15-cities had recorded a growth of about 32.4 per cent as against the industry growth of 26 per cent in the 12-month period ending November 2016.

According to rating agency Crisil Research, investor friendly initiatives by the capital market regulator and extensive investor education campaigns undertaken by fund houses have led to this sharp growth in investments from tier II and tier III cities.

The growth has came largely through the systematic investment plans (SIPs), which enables individuals to invest a fixed amount every month starting from as low as Rs 500.

Mutual funds saw net inflow of Rs 10,923 crore in December 2016, of which Rs 10,103 crore was in equity funds. This is the ninth straight month to witness positive inflows in equity schemes.

As per the latest data available with the Association of Mutual Funds in India (AMFI), the total amount collected through the SIP in December 2016 was Rs 3,973 crore.

In FY17, the mutual fund industry on an average has added about 6.19 lakh SIP accounts every month with the average ticket size of Rs 3,200 per SIP account.

Crisil believes that the positive momentum would continue well into the third quarter of FY17 as investors may opt for tax saving schemes like Equity Linked Savings Schemes. “With the fixed deposit rates expected to fall further and returns from gold and real estate likely to remain subdued, equity markets would attract a large number of investors in the coming months,” said Jaideep Bhattacharya, managing director, Top3choice.com, a mutual fund distribution platform.