A Task borne to endorse Inclusion
A 2012 AMFI report confirmed that 85% of inflows into Mutual funds had been exclusively sourced from the top 15 cities in Country. Subsequently, in a robust attempt to attract participation from regions that still remained under-penetrated in terms of Mutual funds, SEBI introduced several measures to encourage investments from the B15 cities, in the same year.
This included initiatives that mandated Fund houses to set aside two basis points of their daily net assets for investor education and awareness programmes and the launch of the district adoption programme designed to drive financial inclusion pertaining to mutual funds.
The regulating house had also introduced an exclusive incentive programme for garnering assets from beyond the country’s top 15 cities, allowing Mutual funds to charge an extra 30 basis points (a basis point is a hundredth of a percentage point) of the Total Expense Ratio (TER) for garnering assets from B15 cities. In effect, many Fund houses had enforced revised commission and incentive structures for distributors in the B15 cities, to bring in more investors into Mutual funds.
Four years later, it would appear that SEBI’s attempts have finally paid off; financial inclusion and awareness in India has risen to a substantial extent, with a steady rise in participation from investors based out of B15 cities.
According to data from SEBI on investor accounts with 42 fund houses, the overall number of folios have grown from ~4.76 crore mark at the end of last fiscal year to 4.92 crore, as of July 2016. In the April-July 2016 period alone, net inflows of over INR 1.92 lakh crore has been recorded with Mutual fund schemes. As of July 2016, AuM of Equity Mutual funds has reached a new high of INR 15.2 lakh crore, with markedly increased contribution from the B15 cities.
The B15 investment Scene: A CAMS perspective
An integral part of the Indian Finance sector and a trusted service partner to 8 out of the top 10 AMCs in India, CAMS retained its position as the market leader with a substantial market share of 62.18%, as recorded in the quarter ended June.
The following inferences on B15 MF investments are based on data provided by CAMS Data Bureau Services – covering 92% of Mutual Fund Industry
B15 assets were observed to have grown by 30% on a year-on-year basis from June 2015 levels. As of June 2016, investments from B15 cities were estimated to have contributed up to 13% of the mutual fund industry’s total AuM.
Gross inflows recorded for the quarter ended June 2016 was around 37 lakh crores of Rupees, indicating a growth of 12% from its value in the previous quarter. The Gross Sales in B15 locations has increased by 22% as compared to the quarter ended March 2016.
B15 assets were assessed to have a balanced mix of equity and non-equity based assets, with 60% of their assets falling into equity schemes.
The way ahead
More investors from the small towns, now sensitized to the importance and benefits of Wealth Management, are seeking constructive avenues to deploy their retirement money, plan for children’s education and the like. With growing awareness on Mutual funds and how the schemes offer products to meet the diverse needs of the meticulously careful Indian savers, more investments are expected to enter the Mutual fund space from B15 cities.
On a wider perspective, it is heartening to note that foreign investors are returning to the India investment scene, lured by its relatively stable market amidst impending US Fed tightening and other volatilities in the aftermath of Brexit. If anything, the ambiguities will provide for more buying opportunities. On the whole, the future seems to full of possibilities for AMCs as well as investors in the country.
Computer Age Management Services (CAMS) is India’s premier Mutual Fund Transfer Agency serving over 62% of assets of the industry across 16 Mutual Funds. Leveraging superior technology, CAMS brings several innovative services to Mutual Fund investors and distributors. CAMS is also a service partner to leading Insurance Companies, Banks, NBFCs and Alternate Investment Funds. To know more visit www.camsonline.com