The asset under management of mutual funds from beyond top 30 cities has grown 11 per cent in the December quarter to ₹6.96 lakh crore against ₹6.24 lakh crore logged in the March quarter, led largely due to increase in systematic investment plan from smaller cities.

Interestingly, Nippon India MF toppled the bank-backed mutual funds in terms of growth in smaller cities. Nippon India MF registered a growth of 18 per cent at ₹56,229 crore (₹47,825 crore) while HDFC MF followed closely with 17 per cent growth at ₹80,551 crore (₹68,570 crore), according to the Association of Mutual Funds in India data.

The country’s largest bank-backed SBI MF registered a 11 per cent growth at ₹1.47 lakh crore (₹1.34 lakh crore) in smaller cities and that of ICICI MF was up 15 per cent at ₹77,270 crore (₹67,448 crore).

Digital mode adoption

Saugata Chatterjee, Chief Business Officer, Nippon India Mutual Fund said post Covid, the fund house has seen rise in adoption of digital modes of doing transactions and this has helped to incrementally add new SIPs.

The fund house is continuously working on increasing the investor base in the B30 market and are actively propagating asset allocation funds helping investor beat volatility, he added.

Rachit Chawla, CEO Finway FSC said people are left with surplus cash for investment and they prefer equities through systematic investment plan as they have delivered good returns.

Digitalisation has made a major impact in smaller cities in terms of unleashing financial freedom. Mutual funds have driven the point that SIP is a great way of hedging market risk and volatility. Hence, SIP should continue in smaller cities and should further increase in the near future, said Chawla.

However, he said historically when the market crashes, the sentiments also become very low and people tend to refrain from investing or putting in more money, he said.

Besides SIP, the launch of new fund offers helped fund houses garner fresh inflows from smaller cities as there is a general perception that investing at the NFO stage can yield better returns, said Shrikant Shinde, an independent mutual fund distributor.