MF Update: T30 still rule the roost

The market regulator, SEBI is trying its best to increase the penetration of mutual fund investment beyond top 30 cities by tweaking the incentive structure for mutual fund houses and conducting investor awareness programmes. Despite such efforts, most of the investments done by retail investors come from T30 cities (T30, Top 30 cities as identified by AMFI). At the end of September 2018, 78 per cent of the assets of individual investors is from T30 cities.


 
Besides, retail investors are still taking help of distributors to invest in mutual fund schemes. SEBI in the year 2013 asked mutual fund houses to launch direct plans which investors can buy directly through fund houses. The direct plans have lower expense ratio and give better returns than their regular counterpart. Only 16 per cent of the total retail investor bought their fund directly, rest brought mutual fund schemes through distributors.


 
On probing further, we find that investment in the direct plan is mainly routed through T30 cities. Top 30 cities account for 14 per cent of direct investment out of the total 16 per cent. This means that only 2 per cent of the investments that originated from B30 cities are direct plans.