Asset contribution from T30 and B30 cities

SEBI in its recent board meeting announced certain changes in total expense ratio charged by mutual funds. The market regulator permitted additional expense of 30bps for penetration in B-30 cities. For the mutual fund industry, the total geographical location in India is broadly divided into two areas, Top 30 (T30) and beyond the top 30(B30). This additional expense ratio is permitted based on inflows from the retail investors, which for the time being are all individual investors and not from corporates or institutions.

At the end of September 2018, 15 per cent of the assets of the mutual fund industry came from B30 locations. Assets from B30 locations have decreased to Rs. 3.58 lakh crore in September 2018 from Rs. 3.32 lakh crore from June 2018. It increased by around 8 per cent. In the same period, assets from the T30 cities increased by 2.4 per cent to Rs. 20.74 crore.

Asset Mix of T30 and B30 cities

Investments from B30 locations are tilted towards equity assets. Around 65 per cent of the assets from B30 locations and 38 per cent of the T30 assets are in equity schemes as of the end of September 2018. It has remained at the current ratio for many months now. One of the reasons for the higher concentration in debt in T30 locations is due to the presence of institutions in this segment, which is primarily located in T30 cities. Institutional assets are concentrated in T30 locations, accounting for 94% of the total.