Smaller Cities Investors: There has been a strong increase in the number of new investors from small cities investing in Mutual Funds. In the current financial year, during April-August 2024, the mutual fund industry has added 2.3 crore new investors (folio number), of which more than 50 percent are investors from small cities.
53% new investors from small towns
Zerodha Fund House has released a report regarding the increasing number of investors from small towns in investing in mutual funds. According to the report, between April and August, the mutual fund industry has added 2.3 crore new investors, out of which 1.23 crore or 53 percent investors come from cities other than the top 30 cities of the country. That means fewer new investors have been added from the top 30 cities. In small cities, the total number of folios has increased by 1 crore in the period between May to August 2024.
Small cities account for 19% of the total AUM.
According to the report, even though the number of new investors from small cities investing in mutual funds has increased, the share of small cities in the total assets under management of the mutual fund industry is only 19 percent. This means that even though more people are investing from small cities, the average investment size is less than that of big cities. The average ticket size of investment in the retail segment from small cities is Rs 1.13 lakh, while the average ticket size of investment in the retail segment including top 30 and other cities is Rs 2.04 lakh.
54% SIP accounts from small cities
By August 2024, 54 percent of the total SIP account contribution in the mutual fund industry has come from small cities. Opening of more SIP accounts in small cities is being seen as a good sign. From April to August, 18.7 percent SIP accounts were opened in index funds. 79 percent of SIP accounts opened in small cities are in growth or equity schemes.
Investment increased through direct plan
According to the report of Zerodha Fund House, due to efforts made by smartphone apps, direct investment platforms, digital payment systems and mutual fund industry, 50 percent of new investors coming from small towns have invested through direct plans. According to a data, the total number of investors coming from small towns was 8.29 crore in April 2024, which has increased to 9.52 crore in August 2024, i.e. 1.23 crore new investors have joined. The number of investors investing through direct plan was 2.96 crore in April 2024, which increased to 3.6 crore in August. That means 64 lakh new investors have invested through direct plan.
Vishal Jain, CEO, Zerodha Fund House, said, I believe that simple, transparent and affordable products will help individual investors design a better financial future. All these qualities are found in index based products and it is heartening to see their growing trend in small towns.
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