Notwithstanding the all-out effort by the market regulator SEBI and the industry, mutual fund penetration still remains low and opens up opportunity for fund houses to grow their base. Of the 43.34 crore individual PAN card holders, only 8 per cent or about 3.37 crore have invested in mutual fund schemes as of March-end.
The industry had 2.28 crore investors registered with unique PAN in FY21, according to the Association of Mutual Funds in India (AMFI) data. The number of new investors added based on PAN increased 49 per cent to 3.32 crore last fiscal against 2.23 crore in FY21. The investors addition based on PERN was up three per cent to 4.65 lakh (4.52 lakh).
A Balasubramanian, Chairman, AMFI, said mutual funds have huge scope to get more people to invest and efforts to add more distributors in rural regions will help spread the reach.
State-wise penetration
Interestingly, Delhi tops the table in mutual fund penetration with per capita investment of ₹1.54 lakh in June. It was followed by Maharashtra with per capita investment of ₹1.27 lakh . With large number of gainfully employed IT population, Karnataka’s per capita investment in mutual funds was ₹39,670. Gujarat and Tamil Nadu followed closely with investment of ₹38,660 and ₹21,080 per capita investment in MFs.
SEBI sops for B-30 inflows
In order to improve penetration, SEBI had allowed mutual funds to offer an extra incentive of 30 basis points to distributors who bring in investors from beyond top-30 (B-30) cities.
Typically, mutual funds on an average charge a total expense ratio of 2.50 per cent. So, mutual funds or distributors who get inflows from B-30 cities will get to charge an additional 30 basis points. An expense ratio is the amount companies charge investors to manage a mutual fund scheme.
Of the overall industry AUM of ₹35.64-lakh crore, 17 per cent or ₹6.13-lakh crore had come from B-30 cities last month. Interestingly, 75 per cent of B-30 assets are in equity while the same from top-30 is 44 per cent in June.
Manish Kothari, Co-founder and CEO, Zfunds, said if not for the infrastructure deficit, mutual funds have more potential to explore the bottom 500 districts and out of 750 districts AMC offices are there in only 180 districts.
Monthly SIPs are designed for salaried class who earn monthly income whereas 80 per cent of India is either self employed or daily wagers. Customers in smaller cities are aspirational and have long-term goals but do not have access to a right products and the industry has to create a products for this section of the society, just like e-commerce did with Cash on Delivery, he said.