Mumbai, Oct 4
Participation of investors from small cities in the stock market has rapidly increased in recent months as the mutual fund industry has added 2.3 crore investor folios from April till August 2024, out of which more than 50 per cent of them come from such areas, a report said on Friday.
"The number of new investor folios coming from smaller cities has been rising on a monthly basis. Such trends can foster a culture of saving and investing, ultimately contributing to long-term industry growth," a Zerodha Fund House report said.
The report further said that smaller cities still account for only 19 per cent of the overall assets under management (AUM) of the mutual fund industry. It indicates that while more individuals from these regions are participating in investments, but the average investment size may still be lower compared to those from urban areas.
These smaller cities and towns are classified as B-30 cities (beyond the top 30 cities) by the Association of Mutual Funds of India (AMFI). As of August 2024, about 54 per cent of all the SIP accounts in the mutual fund industry are contributed by SIPs from smaller cities. Smaller cities have a larger number of SIP accounts reflecting greater penetration in less urbanised areas.
From April to August 2024, the growth rate in the SIP accounts in smaller cities for index funds (18.7 per cent) is higher than the growth rate of any other category in the industry.
Altogether, about 79 per cent of the SIP accounts from smaller cities are contributed by growth/equity-oriented schemes.