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The direct plan mutual fund (MF) schemes, which are offered by online investment platforms, now have more investment accounts from smaller towns and villages than in the top 30 (T-30) cities.
The retail B-30 (beyond the top 30 cities) accounts or folios surged 52 per cent in the financial year (FY) 2024 vis-a-vis 39 per cent growth in T-30 folios.
At the end of March, retail B-30 folios in direct plans stood at 28.1 million as against 26 million T-30 accounts of individual investors.
Direct MF investment platform Coin by Zerodha believes that a lot of B-30 investors who started investing in equities through demat accounts may now be moving to MFs.
“Post covid, there was a sharp surge in demat account additions across India. These investors are now likely moving to MFs and this is largely happening through the direct plan route. Moreover, the awareness campaigns being run by the MF industry along with the investor education programs is leading to better penetration,” said Neelesh Verma, Product head and AVP, Coin by Zerodha.
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However, the share of B-30 investors in the retail direct plan assets was only a fraction of that of T-30. The 28.1 million B-30 folios had investments worth Rs 1.45 trillion vis-a-vis Rs 5.8 trillion in the case of T-30. This translates to an average investment per folio of Rs 51,600 for B-30 and Rs 223,000 for T-30.
According to MF officials, the industry witnessed strong growth across metrics in FY 2024 on the back of a sharp rally in the equity market.
The benchmark indices, Nifty 50 and Sensex, surged over 25 per cent in FY24.
“The T-30 market is now over-crowded with all players eyeing a share of the AUM pie. As a result, many fund houses are now putting in more emphasis on B-30 expansion. In FY 2024, the strong market rally also boosted the investor and folio additions,” said Jimmy Patel, CEO, Quantum Mutual Fund.
They also attribute the rising penetration in B-30 to the growing need for high yielding investment avenues and access to information around investment products.
“Increased adoption of smartphones, internet penetration, access to information/analysis on funds on internet/social media is leading many new investors to invest in mutual funds, both from metros and smaller towns. Moreover, AMFI, fund houses and distributors are conducting investor awareness campaigns throughout the country which has helped raise awareness about mutual funds. This is further aided by the overall financialisation of savings trend which we have witnessed post demonetisation,” said Abhishek Tiwari, Executive Director & Chief Business Officer, PGIM India MF.
When it comes to regular plans, B-30 still lags behind T-30 by a big margin. At the end of March 2024, the retail regular plan MF folios stood at 52.3 million in B-30 and 70.4 million in T-30, shows data from the Association of Mutual Funds in India (Amfi).
The rally in FY 2024 along with the impressive showing of most equity MF schemes on the returns chart attracted 6.8 million unique investors in FY 2024, 70 per cent higher than in the previous year.
The total unique investor count, mapped by the number of PANs registered with MFs, stood at 44.5 million at the end of the year.
