To understand how effective investor awareness programs have been in growing the AUM in states having low penetration of MF, we selected five states contributing the least AUM in 2014 and charted their asset growth over the next 5 years.
You can see that in all these states the AUM has more than quadrupled in the last five years. The highest rate of growth was witnessed in Andaman and Nicobar Islands whose AUM grew by close to 15 times (at 94% CAGR) during the period. Arunachal Pradesh meanwhile saw the highest growth in absolute terms (Rs. 493 crore) during the period.
While at the current stage, their contribution is still low compared to the overall industry AUM of Rs. 24.31 lakh crore, a continuation of this trend could see smaller states start to contribute meaningfully towards the industry AUM. It will also bring in better geographical diversification for the industry in terms of its assets.
Over the last few years, both SEBI and AMFI have directed their focus on widening the investor base and increasing the mutual fund penetration beyond top metros.
Mandatory expense ratio allocation set aside for investor education programs and permission to charge additional expense ratio for assets raised from smaller towns have helped increase the mutual fund penetration. Moreover, AMFI’s ‘Mutual Funds Sahi Hai’ campaign has been a giant leap in terms of increasing mutual fund awareness among the masses. To help the matters further, Indian equity markets saw a huge rally during the period. This also attracted investors who wanted to participate in the India’s growth story.
Average AUM in the last five years (Rs. crore)
|
|
Sept-2014 |
Sept-2015 |
Sept-2016 |
Sept-2017 |
Sept-2018 |
5-year growth (CAGR) |
|
Andaman and Nicobar Islands |
22.48 |
41.45 |
80.49 |
205.47 |
322.49 |
95% |
|
Arunachal Pradesh |
60 |
126.7 |
266.63 |
615.49 |
553.36 |
74% |
|
Dadra and Nagar Haveli |
77.26 |
76.73 |
102.72 |
182.91 |
282.89 |
38% |
|
Daman and Diu |
56.89 |
80.25 |
127.41 |
211.37 |
380.06 |
61% |
|
Lakshadweep |
1.3 |
1.75 |
4.63 |
6.78 |
7 |
52% |
In keeping with the historical trend, Maharashtra continues to have a lion’s share to the industry’s assets, contributing Rs. 10.02 lakh crore followed by New Delhi (Rs. 2.35 lakh crore) and Karnataka (Rs. 1.80 lakh crore).
In terms of equity assets, Maharashtra (Rs. 2.61 lakh crore), New Delhi (Rs. 80,561 crore) and Gujrat (Rs. 67,518 crore) occupy the top spots.
