Trends and analysis of mutual fund assets in B30 and T30 locations

The mutual fund landscape in India shows a distinct asset allocation and investment pattern between the top 30 cities (T30) and the locations beyond these (B30). The data from February and March 2024 provides insightful observations into these trends, reflecting both investor preferences and regional market dynamics.

Asset Distribution Between B30 and T30 Locations

In March 2024, assets in B30 locations amounted to Rs 9.83 lakh crore, marking a 1% increase from Rs 9.71 lakh crore in February 2024. It also follows a significant annual growth of 44%, from Rs 6.84 lakh crore in March 2023. Comparatively, T30 assets were higher, indicating the larger economic influence of these primary financial hubs.

Composition of Equity and Non-Equity Schemes

B30 locations have shown a strong preference for equity-oriented schemes, with 84% of assets invested in such options both in February and March 2024. This represents a notable increase from March 2023 when 79% of B30 assets were in equity schemes. In contrast, T30 locations had a more balanced approach with 52% in equity and 48% in non-equity schemes as of March 2024.

Equity vs. Non-Equity Asset Allocation in March 2024:

Investor Type: Institutional vs. Individual

Institutional assets are predominantly located in T30 cities, with 95.36% of such investments coming from these areas in March 2024, a slight increase from 95.24% in February 2024. B30 regions, however, hosted only 4.64% of institutional assets in March 2024, down from 4.76% in February 2024.

Conversely, individual investors show greater representation in B30 locations, holding 26% of their assets there in March 2024, slightly up from 26.41% in February 2024. This reflects a consistent year-over-year growth from 25.78% in March 2023.

Investor Type and Location Distribution in March 2024:

Investment Modes: Distributor vs. Direct

The choice between direct and distributor-led investments has evolved over the past year. As of March 2024, 23% of retail investors chose direct investment routes up from 20% in March 2023. High Net Worth Individuals (HNIs) also increased their direct investments from 26% to 27% during the same period. Across all asset classes, 45% of mutual fund industry assets were held directly.

The preference for direct investments varies significantly by asset type:

• 80% of liquid/money market scheme assets were held directly, where institutional investors dominate.
• Direct holdings in debt-oriented schemes accounted for 62%.
• Equity scheme direct investments stood at 26%.

The mutual fund industry is undergoing exciting changes in 2024. A notable trend is the growth in smaller cities (known as B30 cities). Individual investors in these areas are showing a strong preference for equity-based mutual fund schemes. Meanwhile, institutional assets remain heavily concentrated in the top 30 cities (T30), where direct investments, particularly in non-equity assets, continue to be the preferred approach.

An interesting shift is also being observed among retail and high-net-worth individual (HNI) investors, as they are gradually opting for more direct investments, indicating a move towards greater investor autonomy and reduced reliance on intermediaries.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.