A recent study by Zerodha fund house reveals that the number of new investors coming from smaller cities has been rising on a monthly basis. In the study quoting AMFI Mutual Fund Industry data, the mutual fund industry has added 2.3 Cr investors (folios) from Apr to Aug 2024. More than 50% of them come from smaller or B-30 (Beyond the top 30 cities) cities, says the study.
However, smaller cities still account for only 19% of the overall Assets Under Management (AUM) of the mutual fund industry as of Aug 2024.
Zerodha Study: Factors That May Have Contributed To This Trend In Smaller Cities
Contribution from live SIP Accounts: About 54% of all the SIP accounts in the mutual fund industry is contributed by SIPs from smaller cities as of August 2024.
From Apr to Aug 2024, the growth rate in the SIP accounts in smaller cities for Index Funds (18.7%) is higher than the growth rate of any other category in the industry, says Zerodha. Altogether, about 79% of the SIP accounts from smaller cities are contributed by growth/equity oriented schemes.
Access to Direct Plans: The rise of smartphone apps, direct investment platforms, digital payment systems, and industry initiatives has led to more than 50% of all the new investors in smaller towns to invest through direct plans, says the study by Zerodha.
The average ticket size of the retail segment in B-30 cities is about Rs 1.13 lakh. The combined average ticket size of the retail segment for (T30+B30) cities is about Rs 2.04 lakh.
The growth in the number of mutual fund investors from smaller towns may indicate a shift towards financial inclusion and investment awareness in these regions, said the Zerodha study in its conclusion.
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