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. 1.72 lakh crore in October 2014 to Rs. 2.13 lakh crore in October 2015. The rate of growth in assets for B15 locations was 23% while the industry grew at 24%. Overall, B15 assets accounts for 16 percent of industry AUM.
In terms of composition of assets, B15 has a better balance of equity and debt assets. Nearly 51% of the assets from B15 locations is in equity schemes while, only 29% of the assets from T15 is in equity schemes. Distributors say that IAPs are helping them get investors in equity funds from B15 locations.
B15 locations contribute 23% of assets held by individual investors and 10% of institutional assets Given that majority of institutions are located in T15 locations, they account for 90% of the total.
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.
