It is not just retail AUM, which has been increasing in B30 cities. AMFI’s latest data shows that 45% of the individual mutual fund distributors are from the B30 cities. Of the 83183 registered individual distributors, over 37664 are from B30 cities.
Experts attribute this to the increasing popularity of mutual funds in the smaller cities. Also, many fund houses have increased their footprint in the B30 cities through branch offices.
Growing popularity of mutual funds in B30 cities has encouraged people to take up distribution. “Investors in large cities have an option to approach bank and wealth managers with their investment related matters but people in small cities depend on IFAs for advice on mutual funds. These distributors bring in retail money from B30 cities, which stays with the industry for long term,” said a senior official from a large fund house requesting anonymity.
However, a few AMC officials have a different view. Swarup Mohanty, CEO, Mirae Asset MF believes that the growth in number of distributors in B30 is not in line with the number of cities in B30. “If you look at the geographical spread of ARN holders, majority of IFAs are from top 30 cities indicating that the concentration of distribution business is in large cities.”
Adding that the industry has a long way to go in terms of number of B30 distributors, he said, “The industry’s veteran distributors and IFA associations are now reaching out to distributors in small cities and towns to encourage them to grow business.”
Another fund official requesting anonymity said that the industry had incentivized distributors for five years to attract more distributors in B30 locations; however, post the upfront commission ban, the industry will have to revisit its strategy to attract more distributors, he said.
Sharing how the MF industry can attract more distributors from B30 locations, Saugata Chatterjee, Co-Chief Business Officer, Reliance Mutual Fund feels that the collective efforts of AMCs can help the MF industry increase its distribution footprint in small cities and towns. He further said that the industry should look at adding small entrepreneurs who are running client facing businesses and looking to increase their income stream. He said, “In my view, we can reach out to medical store operators, car or home loan distributors and other entrepreneurs who can bring new investors to the industry.”