SIPs: Non-metros clock better growth than top 15 cities

Non-metros have outpaced the top 15 cities when it comes to SIP investments, growing at a CAGR of 30 per cent in the traditional strongholds of the mutual fund industry during the past three years, according to Crisil data.

Of late, the Rs 20-trillion asset management industry has been witnessing a lot of traction on the systematic investment plans or SIPs, that too from retail investors hailing from the hinterland.

"Driven by the surge in SIP inflows, beyond the top 15 (B-15) cities or non-metros have seen faster growth in assets for the mutual fund industry, growing at a CAGR of 30 per cent in the past three years to March 2017, compared to T15 cities' 27 per cent growth" Crisil said in a weekend report.
 

Further, individual investors' (retail+HNIs) assets have witnessed higher growth in B15 cities at 35 per cent against 28 per cent for T15 cities and a large portion of growth has come from SIPs.

The study attributes the increase in B15 investor base and assets to the Sebi's move to allowing fund houses to charge additional expense ratio up to 30 basis points (bps) on daily net assets for inflows beyond T15 cities.

Retail investor folios, the report said, on a decline in the aftermath of the financial crisis, have reversed course in the past three fiscals and today stand at a whopping 52.31 million.

The MF industry currently has about 14 million SIP accounts. The industry collected Rs 4,3921 crore through SIPs in fiscal 2017, equivalent to almost 50 per cent of the net flows in equity funds for the year.

"With favourable structural factors like greater participation of retail investors through SIPs which formed nearly 50 per cent of net equity flows last fiscal, influx of pension money and growing realisation among the public that MFs are an ideal wealth creation opportunity, the industry will see a quantum leap going forward," Crisil managing director and chief executive Ashu Suyash said.

"We see growing penetration in tier II and III cities, or the B15 cities, and retirement-oriented funds and solutions as the next catalysts of sustained growth," she added.