Overall, the B15 cities currently account for nearly 14% of industry’s AUM
SEBI’s efforts to increase the penetration of mutual funds seems to be yielding the desired results as many fund houses have seen a growth in their assets coming from smaller towns.
UTI Mutual Fund, Religare Invesco Mutual Fund and Canara Robeco Mutual Fund have the highest proportion (in percentage terms) of their AUM coming from B-15 cities, shows an analysis of geographical concentration of AMCs AAUM in B-15 cities done by Cafemutual. The analysis was done on the basis of AMCs quarterly disclosure of AUM as on March 2014 and March 2015.
Of the Rs.92,751 crore AUM managed by UTI, 41% comes from B-15 cities.
Suraj Kaeley, Group President (Sales & Marketing), UTI Mutual Fund attributed this success to their long established presence, strong distribution channel and deeper penetration in smaller cities. UTI has over 130 branches in B-15 cities and has over 300 Business Development Agents (BDAs) across India, he added.
UTI is followed by Religare Invesco Mutual Fund which has 24% of its AUM coming from B-15 cities.
While public sector bank promoted fund houses like Canara Robeco, Baroda Pioneer and Union KBC have gained strong foothold in B-15 cities, private sector bank sponsored AMCs like ICICI Prudential, HDFC and Kotak have either witnessed a flat growth or a decline in the proportion of their B-15 AUM.
Of the Rs.7,617 crore AUM managed by Canara Robeco, 22% comes from B-15 cities. Similarly, Principal, SBI and Baroda Pioneer have 21%, 20% and 16% respectively of their AUM coming from B-15 cities.
Experts attributed this to wide branch network of the promoter banks across the country. “Such fund houses leverage the extensive banking network of their parent banks. Other fund houses need to either tie up with banks or open new branches to increase their business in small cities and towns which is an expensive, resource intensive effort. Hence, bank sponsored AMCs have an edge over others,” said a senior official of a mid-sized foreign AMC.
Of the non-bank promoted houses, Tata, Reliance, Franklin Templeton and L&T have received healthy investments from hinterland. Reliance MF and Tata MF have 18% of AUM coming from the B15 cities. Similarly, Franklin Templeton and L&T boasted of 15% AUM concentration in B-15 cities.
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. Overall, the B15 cities currently account for nearly 14% of industry’s AUM.
