While the MF industry has witnessed robust inflows and healthy growth in the last five years, the B30 share has remained stagnant, said SEBI Chairman Ajay Tyagi at the 25th annual general meeting of AMFI held virtually yesterday.
Expressing his concerns over low B30 penetration of mutual funds, Tyagi said that the share of B30 cities in the total MF industry AUM has hovered around just 15%-17% over the last four years.
Tyagi urged the MF industry to focus on increasing penetration in B30 cities and said, “To increase penetration of mutual funds beyond the top cities, SEBI started incentivizing mutual fund investments from beyond top 15 cities and later from beyond top 30 cities. However, the share of B-15/B-30 cities in the total industry AUM has hovered around just 15-17% over the last four years. We need to strive more to make mutual funds popular in areas beyond top 30 cities.”
Currently, AMCs can charge additional 30 bps applicable on B30 cities only on assets from retail investors. SEBI rules say that retail investors are those who invest up to Rs.2 lakh per transaction. Fund houses can incentivize their distributors through additional B30 commission only through trail model.
As on August 2020, B30 cities AUM account for nearly 17% (Rs.4.58 lakh crore) of the total industry’s assets (Rs.27.49 lakh crore).
Last month, a few AMCs had proposed to AMFI that distributors should get incentive for bringing new customers to mutual funds. They are of the view that the MF industry should discontinue incentivizing distributors for B-30 assets and shift its focus on incentivizing distributors for adding new customers irrespective of geographical location.
