UTI, SBI have the highest proportion of B-15 towns AUM

With 23.5% and 20.2% of their AUM coming from B-15 cities, UTI and SBI are the AMCs with the highest proportion of assets B-15 cities.

Among all fund houses, UTI Mutual Fund and SBI Mutual Fund have the highest proportion of their AUMs coming from B-15 cities, shows an analysis of geographical concentration of AMCs AAUM in B-15 cities done by Cafemutual.

Out of Rs 69,450 crore AUM managed by UTI, 23.5% comes from B-15 cities. A UTI spokesperson attributed this success to their long established presence, strong distribution channel and deeper penetration in the smaller cities. UTI has 150 branches in B-15 cities. UTI is targeting to have 30 percent of AUM from B-15 cities in the coming months, he added. At present, UTI is strengthening its distribution force by empaneling 900 new cadres of distributors in smaller cities.

UTI is followed by SBI with 20.2% of its AUM coming from B-15 cities/towns. SBI currently manages AUM of Rs 54,904 crore. DP Singh, Chief Marketing Officer of SBI Mutual Fund said “Currently, 34 percent of our inflows comes from B-15 cities. We have derived this figure from area pin codes.” He said that the banking network of SBI and its associate banks their largest distributors of SBI MF have helped their business grow in smaller towns. At present, SBI MF has nearly 13000 distributors in B-15 cities and is planning to empanel 3000 more new cadre of distributors

India’s largest fund house by assets, HDFC boasts of 19.7% AUM concentration in B-15 towns, followed closely by Reliance at 19.6%. A senior official from HDFC MF said “We have 20 offices in B-15 cities which has created visibility as well as increased our reach in smaller cities. To increase our AUM from the smaller cities, we are conducting investor’s awareness programme and enrolling new cadres of distributors in B-15 cities.”

Among the medium sized fund houses, Religare MF has 19.2% AUM concentration in the hinterland. Axis and Goldman Sachs too boasted of 16% AUM concentration in B-15 towns. ICICI Prudential MF has 16% AUM concentration in B-15 cities.  Peerless MF figures could not be obtained till the filing of this story.

A senior official from LIC Nomura (which has 13 percent of AUM concentrated in B-15 cities) said that the strong presence of LIC in smaller cities and towns has increased the AMC’s AUM in B-15 cities.  The official also pointed out that AMCs promoted by PSU banks have an edge over others in penetrating in smaller towns.

The analysis was done on the basis of AMCs quarterly disclosure of AUM as on March 2013.  

SEBI has allowed AMCs to charge higher expense ratio on assets sourced from beyond the top 15 cities. Fund houses have also hiked the commission structure for application received from these towns. Currently the top 15 cities account for nearly 87% of industry’s AUM. Nearly 5% of industry’s assets are concentrated in the next top 20 cities (those beyond top 15).