MFs see higher growth in small cities: Karvy report

Vijay C Roy

Tribune News Service

Chandigarh, January 19

Mutual fund investment in small towns such as Chandigarh, Ludhiana and Jalandhar is witnessing higher growth than traditional saving instruments like saving deposits, term deposits etc., says Karvy Wealth Report released recently.

According to the data, the total deposits, including current, savings and term deposits, grew by 6% in Chandigarh (Rs 6,07,19,900 crore), 11% each in Ludhiana and Jalandhar in the second quarter of the current fiscal as compared to the corresponding period previous year. The total deposits in Ludhiana and Jalandhar were Rs 5,55,49,400 crore and Rs 5,84,00,600 crore, respectively.

According to the report, around 27% of individual assets in mutual funds are currently held in B15 cities. The story looks no different for Punjab from the all India pattern. While Chandigarh’s assets under management (AUM) grew by 34% (Rs 11,222 crore), its contribution to the industry’s AUM was 0.55%. Jalandhar grew by 35.9% (Rs 4,081 crore), contributing 0.20% to the industry’s AUM. Similarly, in Ludhiana, the AUM grew by 29.1% (Rs 8,977 crore), contributing 0.44% to the industry’s AUM.

The report also depicts increasing appetite for equities among retail investors in the rural and semi-urban areas with growing awareness. Even the investors’ preference towards direct equities is on the rise in smaller cities. As per the report, the wealth in direct equity grew by 26.80% in FY17 as compared to a decline of 13.84% in FY16.

Abhijit Bhave, CEO, Karvy Private Wealth, said semi-urban and rural centres have shown higher propensity towards financial savings. This is in contrast to the traditional ways of investing in physical assets such as real estate and gold.