A Zerodha report said on Friday that the participation of investors from small cities in the stock market has rapidly increased in recent months. The mutual fund industry added 2.3 crore investor folios from April to August 2024, more than 50 percent of which came from such areas.
“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 Zerodha report further said that smaller cities still account for only 19 percent of the mutual fund industry’s overall assets under management (AUM). This indicates that while more individuals from these regions are participating in investments, their average investment size may still be lower compared to those from urban areas.
The Association of Mutual Funds of India (AMFI) classifies these smaller cities and towns as B-30 cities (beyond the top 30 cities). As of August 2024, about 54 percent of all 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 percent) was higher than the growth rate of any other category in the industry.
Overall, growth/equity-oriented schemes contribute about 79 percent of the SIP accounts from smaller cities.
Vishal Jain, CEO of Zerodha Fund House, said: “I strongly believe that simple, transparent and affordable investment products will help individual small investors design better financial futures. Index-based funds exhibit all these qualities, and I’m heartened to see their growing trend in smaller cities and towns.” “The average ticket size of the retail segment in smaller cities is about Rs 1.13 lakh, while the combined average ticket size of the retail segment for (T30+B30) cities is about Rs 2.04 lakh,” he added.
–IANS
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