Presence of mutual funds is heavily skewed in favour of 60 districts, out of which a lion's share originates from Mumbai, a Sebi commissioned study has found.
The study, conducted by independent experts for Sebi's Development Research Group, revealed 60 districts contribute over 90 per cent to the total assets under management (AUM) of the industry. Mumbai alone contributes a staggering 58.25 per cent to the collective asset base.
"This is primarily due to the fact that Mumbai houses the headquarters of most of the large companies, thereby getting a bulk of investments through non-retail or institutional avenues. If non-retail customers are taken out, Mumbai starts looking like the other larger metros of the country," it said.
Stating that AUMs are unevenly distributed across the country, the study attributed the lack of penetration in the mutual fund space to low demand of these investment products from the public outside the top 15 cities.
Elaborating further on low penetration, the study said: "This may be due to low level of financial literacy, cultural attitudes towards savings and investments, etc."
"Further, low supply of mutual funds outside the major cities may be on account of perceived lack of demand from general retail investors or due to lack of available manpower," it added.
As per the study, the main concern raised by fund houses on lack of their presence outside top-15 cities was shortage of good talent for training and hiring mutual fund agents.
Currently, the collective AUM of 45 fund houses stood at Rs 9 lakh crore.
The study said distribution costs as a function of AUM generated in the top districts are far higher than in the lower districts.
It also stated that demographic and social development factors such as adult literacy and bank penetration (savings accounts) do not show strong co-relation with mutual fund presence.
The study has been co-authored by Rajesh Chakrabarti, Sarat Malik, Sudhakar Khairnar and Aadhaar Verma and is part of an initiative undertaken by Sebi to commission studies on different aspects affecting the capital markets.
