SEBI’s push to increase the penetration of mutual funds in smaller towns seems to be yielding the desired results. The B15 market is growing at a steady pace, shows the latest AMFI data.
Assets from B15 locations grew from Rs. 1.65 lakh crore in August 2014 to Rs. 2.08 lakh crore in August 2015. The rate of growth in assets for B15 locations was 26% while the industry grew at 29%.
Growth in B15 assets
|
Market |
Aug-14 |
Aug-15 |
Change |
|
T15 |
8,71,003 |
11,25,504 |
29% |
|
B15 |
1,64,793 |
2,07,881 |
26% |
|
Total |
10,35,796 |
13,33,385 |
29% |
|
Source : AMFI Rs. cr. |
|||
Asset mix
In terms of composition of assets, B15 has a better balance of equity and non-equity assets. Nearly 50% of the assets from B15 locations is in equity schemes.
Also, equity assets are growing steadily in B15 cities. Equity assets accounted for 43% of B15 assets in August 2014, which went up to 51% in August 2015.
Distributors say that IAPs are helping them get investors in equity funds. Rajesh Kulwal, President of Insurance and Investment Advisor Association (IIAA) of Indore says “We have been conducting a lot of IAPs in Indore. Such events helps investors understand the benefits of participating in equities. We are seeing good interest in equity funds, especially through SIPs.”
Jabalpur based IFA Jagdish Nagdev says, “I think the B15 assets are growing largely because of the push from banks and national distributors. Bank sponsored AMCs have good presence in small towns which is helping the growth in B15 assets.”
Individual assets from B15 locations
23% of assets held by individual investors is from the B15 locations. About 9% of institutional assets come from B15 locations. Institutional assets are concentrated in T15 locations, accounting for 90% of the total. This is because of institutional presence in T15 cities.
Regulatory push
In September 2012, SEBI allowed AMCs to charge additional TER of up to 30 basis points if the new inflows from these cities are minimum 30% of the total inflows. In case of less inflows, the proportionate amount is allowed as additional TER.
This allows AMCs to pay higher commission to B15 distributors. Also, the recent cap of 1% upfront is not applicable to B15 market.
However, the Sumit Bose committee has recommended bringing parity in B15 and T15 commissions. “The extra commission in B15 should be removed and a level playing field be created in the country. Manufacturers and distributors should on their own tap such unexplored markets to increase their sales and market share,” states the report.
Distributors say that it would be difficult to grow the B15 market if the commissions are brought down. “The awareness about mutual funds is very low in our market. If the commissions are cut down further, majority of IFAs will switch to other products,” adds Jagdish.
