Why T30 cities still rule the roost?

Shashikant Singh
/ Categories: Mutual Fund
Why T30 cities still rule the roost?

Recently one more asset management company entered the mutual fund industry and launched two funds. Their strategy to grow the business is primarily focused on T30 cities through IFAs or independent financial advisors and by going digital in B30 cities. T30 refers to the top 30 geographical locations in India and B30 refers to the locations beyond the top 30. One of the reasons for such focus lies on the asset generated by T30 cities.

At the end of March 2019, Rs. 20.78 lakh crore of industry assets originates from T30 cities compared to Rs. 3.8 lakh crore that comes from B30 cities. In terms of share of assets from T30 accounts for 85 per cent of the total industry’s assets. This despite regulator’s policy of incentivising the assets generated from B30 cities.


 

Nonetheless, the rate of increase in asset size from B30 is better than T30 cities, albeit from a lower base. The asset from B30 cities has increased at a rate of 3.6 per cent on a monthly basis compared to a 1 per cent increase witnessed in T30 cities.

One of the important characteristics of assets from B30 cities is that they tend to focus more on equity assets. In-line with this, 65 per cent of the assets from B30 locations are in equity schemes at the end of March 2019 compared to 64 per cent in February 2019. Whereas when we look at T30 cities, equity-oriented schemes accounted for 38 per cent in March 2019 and 37 per cent in February 2019.


Despite a lower share of equity assets from T30 cities, in absolute terms, it is thrice the size of equity assets from B30 cities. Of around Rs. 11 lakh crore invested in equity MFs, T30 accounts for 75 per cent of them and rest by B30 cities. Therefore, new fund houses still look for T30 cities to increase their business.

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