Indian mutusl dund houses are often criticised for not reaching out to the hinterland & only focusing on the top tier cities. Now, the top 5 cities - Mumbai, New Delhi, Bangalore, Chennai & Kolkata account for 70% of the industry’s total assets.
Cities Contribution to total AUM*
Mumbai 42 %
New Delhi 13 %
Bangalore 6 %
Chennai 5 %
Kolkata 5 %
Total 71%
* Data as on March 31, 2012
Source: AMFI ( Association of Mutual Funds in India)
The regulator SEBI is also planning to reduce the fees mutual fund distributors have to pay to the industry body AMFI for obtaining a registration number. Now, a distributor has to fork out Rs. 5,000 to register as an intermediary with AMFI and get an ARN (AMFI Registration Number).
SEBI is likely to direct AMFI to bring down the registration fee substantially, said people with knowledge of the development. The sum charged for obtaining an ARN is not high but it was still preventing small distributors from enrolling. The move will help people from smaller cities enroll as mutual fund distributors.
Education Camps In Smaller Cities..!
SEBI may informally ask mutual fund houses to conduct education camps in smaller cities to help people understand financial products. This will also help in increasing the investor penetration, now languishing at just 3% cent of the population.
Now, equity funds can charge an expense ratio of between 1.75% & 2.5% of the scheme’s net assets in a year. The ratio comes down as the fund size gets bigger. The 2.5% expense ratio can be charged only for the first Rs. 100 crore of assets and it drops by 0.25% for every Rs. 300 crore.
No suprise to see top metro cities in the list. Mumbai is economical hub of the country and most of the investment money comes form the same. 42% of the total mutual fund investment is definitely a huge number. Good piece of information to have. thanks for sharing it.
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