While the assets of the mutual fund industry fell, retail assets in the smaller cities witnessed a marginal increase. It seems retail assets of B15 cities are stickier.
The AUM from B-15 towns in the retail segment increased marginally, by Rs.230 crore, to reach Rs.3.24 lakh crore in February, AMFI data shows. This comes despite a fall in the overall equity AUM.
The fall in the overall AUM that was due to mark-to-market losses and redemption, did not, however, have any impact on retail B15 AUM. The overall AUM in pure equity funds decreased by more than 1% while retail B15 AUM increased by 0.07%.
Experts attribute the increase to the long-term nature of B15 investment and the predominance of SIP as an investment tool.
D.P Singh, CMO, SBI Mutual Fund, says that retail investors in small cities are not worried by the changes in the tax laws, which makes the assets from these locations sticky. “Retail investors in the small cities are not worried by the tax laws as their ticket size is small compared to the ticket size of investors in T15 cities. Also, once they invest, they stay invested for the long term. After the Budget, many investors in the top cities redeemed their investments with a profit,” said the CMO..
Ranchi-based Pradeep Jain of PMPK Wealth Advisors attributes the increase in retail B15 AUM to increasing SIP folios. “The retail investors in the smaller cities primarily invest through SIPs. This is evident from the fact that SIP folios in B15 have overtaken lump sum folios. In addition, these investors do not pay attention to the daily ups and downs of the markets,” said Pradeep.
“The returns delivered by equity funds are still attractive when compared to other financial products, like fixed deposits or postal savings. Although the markets have been volatile in February, advisors working in B15 cities are still able to distribute mutual funds on the past record of some of the big schemes,” he adds.
Retail AUM from the top cities did not follow the same route, though. Retail AUM in T15 cities witnessed a decline of Rs.9,000 crore and stood at Rs.8.61 lakh crore in February, down from Rs.8.70 lakh crore in January.
Overall, retail AUM witnessed a marginal decline of less than 1 per cent from Rs.11.93 lakh crore to 11.85 lakh crore in February.
