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Mutual fund (MF) investors from the so-called Bimaru belt allocate more of their capital to equities than counterparts in the rest of India.
Equity comprises Rs 29,438 crore from Bimaru states of their total assets of Rs 75,239 crore, a bit over 39.1 per cent. The figure for India as a whole is 26.1 per cent. Of the total assets under management (AUM) of Rs 10.68 lakh crore as on end-September, about 26 per cent or Rs 2.79 lakh crore was in equity-related schemes.
The Bimaru term was coined in the 1980s to refer to economically backward states of Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh (all undivided, as existed then; it would now have to also cover Jharkhand, Chhattisgarh and Uttarakhand). Equities now seem less shunned here than in the rest of the country.
In fact, if one digs deeper the finding reveals that in absolute terms, Madhya Pradesh (Rs 4,778 crore) and erstwhile Bihar (Rs 5,448 crore) have surpassed statistics from Kerala (Rs 4,201 crore).
In proportion of investments in equity of the total AUM, Maharashtra and New Delhi have only 19-21 per cent; Karnataka, Haryana and West Bengal are between 14 and 30 per cent,- far lower than their Bimaru counterparts.
“This is quite embarrassing. It clearly suggests that focus only on B-15 (beyond the top 15) cities should not be the case. The top cities (in affluent states) also need to be looked at when it comes to investor education. There is hardly any investment in equities from the affluent population concentrated in big cities,” said Dhirendra Kumar, chief executive of fund tracking firm Value Research.
Prashant Jain, chief investment officer of HDFC MF, said: “The need is to educate investors about equities. In India, allocation to equities by households is very low. The big challenge is how to make people more aware of equities. We need to explain equities to investors. It is a volatile asset class in the short run but in the long term, it outperforms most other asset classes.”
Further, when equity AUM exposure from India's northeastern states of Arunachal Pradesh, Assam, Mizoram, Meghalaya, Nagaland, Manipur and Tripura is taken into consideration, it stands at 47 per cent of the total AUM.
Experts might argue that assets from these locations are small relative to other states but the fact remains that the proportion towards equity allocation is way higher than in the rest of the country.
Niranjan Risbood, director (fund research) at Morningstar India, said: “It’s an interesting data. It shows how the measures taken by the regulator over the past few years have helped improve the situation. The 30 basis points of additional fees if assets are garnered from B-15 cities has helped the sector.”
Interestingly, the island groups of Andaman & Nicobar and Lakshadweep top the list in equity exposure, at 71-74 per cent, shows the data from the Association of Mutual Funds in India.
