Rural MF investors rise; B-30 leads SIP count with 42 million accounts

The top 30 cities with the highest MF investments are referred to as T-30, while the rest of the country falls under the B-30 classification

Investors in the semi-urban and rural pockets of the country have outstripped their urban counterparts in terms of new systematic investment plan (SIP) account openings in mutual fund (MF) schemes in recent times.

 

In the past year, investors from beyond the top 30 cities (B30) accounted for 60 per cent of the net additions in SIP accounts in active equity schemes.

 

The MF industry classifies investors into two broad subsets — T30 and B30. The top 30 cities, which have the highest MF investments, are called T30. The rest of the country is classified as B30.

 

An analysis of industry data shows that the number of B30 SIP accounts in active equity schemes jumped 42 per cent during the September 2023 to September 2024 period to 42 million. The growth in T30 accounts was lower at 28 per cent.

 

The higher growth rate propelled the B30 SIP count over that of the T30 tally in November 2023. Since then, B30 has managed to extend its lead by 3.7 million. At the end of September 2024, B30 investors had 42.1 million SIP accounts in active equity schemes compared to 38.4 million T30 accounts.

 

“The majority of the SIP accounts are now from B30. The strong growth in B30 accounts in recent years can be attributed to comparatively lower penetration in these areas along with growing distribution strength. While acquiring new small-ticket investors in T30 is becoming economically unviable for distributors, the business remains viable in B30. In addition, the competition from other non-traditional products is lower in B30," said D P Singh, deputy managing director (MD) and joint chief executive officer (CEO), SBI MF.

 

According to Jimmy Patel, MD and CEO of Quantum MF, the growing B30 penetration is a result of continued efforts by asset management companies and the industry as a whole.

 

“The growing distribution strength and marketing campaigns have been a factor. Television campaigns have likely had a higher impact in these regions. Also, the larger players have been focusing a lot on B30. Given their size and the brand they command, there is a pull factor working to their advantage,” he said.

 

The purpose of dividing the country into the T30 and B30 baskets was to drive penetration in smaller towns and rural areas. The classification allowed the industry to have varying distribution commission structures and other measures in place for B30 penetration.

 

In addition, mutual funds have managed to expand their branch networks to establish a physical presence in many of the semi-urban areas.

 

However, the top 30 cities remain significantly ahead of the rest of the country in terms of SIP inflows. In September 2024, the T30 SIP accounts registered Rs 11,872 crore in inflows compared to Rs 8,127 crore in B30 inflows.

 

The rising MF penetration has also been helped by the buoyant equity market and the strong performance track record of equity schemes across time frames. The industry added nearly 10 million new investors in the 12 months ending September 2024, bringing the unique investor count to over 50 million.

 

According to MF executives, the surge in new investors is underpinned by the growing appeal of equity investments.

 

While retail interest in equities has been steadily growing since the pandemic, the recent uptick in investor numbers is attributed to the strong market rally, the robust performance of equity schemes, and a wave of new fund offerings in popular categories, according to experts.