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The mutual fund industry (MF) is on a roll with assets under management (AUM) doubling from about ₹11 lakh-crore in July 2014 to nearly ₹24 lakh-crore in July 2018. But what has not really changed much is the continued dominance of a few States and cities in the total pie.
Of the 36 States and Union Territories (UTs), just five — Maharashtra, Delhi, Karnataka, Gujarat and West Bengal — account for more than 70 per cent of the total AUM of the MF industry as of July 2018. In July 2014, their share had been about 73 per cent.
Add three more — Haryana, Tamil Nadu and Uttar Pradesh — to the equation, and the top eight States account for close to 84 per cent of the AUM as of July 2018, not very different from their nearly 85 per cent share in July 2014.
In sharp contrast, the bottom 20 contributing States and UTs — including the North-Eastern States, Jammu & Kashmir, Bihar, Chhattisgarh, Uttarakhand, Himachal Pradesh and most UTs — account for about 3.5 per cent of the July 2018 AUM.
Big-city dominance
Maharashtra remains the top contributor to the industry’s AUM with a close to 42 per cent share in July 2018, compared with about 46 per cent in July 2014. The dip in its share has largely been re-distributed among the other top seven contributing States. The high concentration of AUM in the top eight States flows essentially from the heavy-lifting done by their key cities. For instance, financial capital Mumbai accounts for nearly a third of the total AUM as of June 2018.
This, combined with Pune’s over 4 per cent share, propels Maharashtra to pole position.
Delhi-NCR has a nearly 16 per cent share in the industry’s AUM. Karnataka’s position in the top three States with an about 7 per cent share is primarily driven by software hub Bengaluru (6 per cent).
Similarly, Ahmedabad, Kolkata and Chennai account for the chunk of the share of Gujarat, West Bengal and Tamil Nadu respectively.
“The industry had taken a top-down approach while setting up the asset management business in India and rightfully so,” says Swarup Mohanty, CEO, Mirae Asset Global Investments (India). “Hence we see the AUMs are skewed towards the top cities at the moment. I believe it would not change for sometime as most of the wealth remains in these cities. I think in five years we will see the percentage share gradually coming down as other cities start getting penetrated.”
In effect, the top seven cities and surrounding areas account for nearly 70 per cent of the total AUM of ₹23.6 lakh crore as of June 2018.
Small-city share rising
Meanwhile, aided by awareness campaigns and more incentives to distributors, the share of assets from the beyond-the-top-15 (B15) cities in the total AUM pie has also gone up.
It increased from 16 per cent as of March 2014 to 19 per cent as of March 2018, shows the AMFI CRISIL Factbook 2018.
But the steady share (84-85 per cent) of the top eight States over the past four years, despite a dip in contribution from the larger cities, suggests that these States together have increased their weights among their smaller cities.
Overall, Maharashtra, with about ₹10 lakh-crore as of July 2018, has the largest AUM among States and UTs, while Lakshadweep with ₹7 crore has the smallest.
New Delhi tops the per capita investment in mutual funds, with about ₹1.4 lakh, while Manipur ranks at the bottom with ₹1,460.
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