Mutual Fund Investments: Smaller Cities Steal the Show from Metros

The efforts undertaken by the Association of Mutual Funds in India (AMFI) through incentives and extensive campaigns have paid off as inflows into mutual funds from smaller cities are growing a notch higher than the growth in top cities. 

As per a report, the share of a metro like Mumbai in the overall Assets Under Management (AUM) of the mutual funds industry has dipped to 27%  in the March quarter. In March 2017, the number stood at 42%.

A city like Pune, which gained market share to 4.04%  from 3.7%, has surpassed cities like Ahmedabad, Chennai, and Kolkata to comfortably register a fourth spot among the top 30 cities in terms of mutual fund asset holdings.

On the other hand, Durgapur, an industrial city in West Bengal, has witnessed its asset base surge 154% to Rs 5,585 crore, while mutual funds assets at Kota in Rajasthan have grown three-fold to Rs 5,589 crore in the last five years.

While it is ranked last among the top 100 cities, Alwar in Rajasthan has clocked 51%  growth in mutual funds assets at Rs 2,306 crore in the year ended September 30, 2023.

Similarly, down south, Coimbatore has retained 16th place with an AUM of Rs 17,699 crore, while Madurai and Tiruchirappalli were ranked 57th and 77th with assets of Rs 4,639 crore and Rs 3,256 crore, respectively. The mutual fund assets in Jammu surged 22% to Rs 3,232 crore in the past one year.

Mumbai, which registered a growth of 10% in AUM at Rs 12.62 lakh crore, recorded 27% overall industry assets of Rs 46.58 lakh crore as of September 30, 2023. Despite the Securities and Exchange Board of India (SEBI) suspending the B-30 incentive, the mutual fund industry has witnessed significant growth in tier-II and tier-III cities.