MUMBAI: The participation of investors hailing from smaller cities in India’s stock market has witnessed significant momentum. From April to August 2024, the mutual fund industry reported an impressive addition of 2.3 crore investor folios, with over 50 per cent originating from cities classified as B-30, or those beyond the top thirty urban centres.
The trend marks a pivotal shift, with implications not only for individual financial growth but also for the broader economic landscape.
The report by Zerodha Fund House highlights that while the number of new investor folios from smaller cities is consistently increasing, these regions still account for only 19 per cent of the overall assets under management (AUM) within the mutual fund industry.
The disparity suggests that, although participation is rising, the investment amounts from these areas may not yet match those from urban investors, pointing to a potential for future growth and investment education.
As noted, the smaller cities are characterised by a higher proportion of systematic investment plans (SIPs), with about 54 per cent of all SIP accounts derived from these regions. The data reveals a higher growth rate for index funds at 18.7 per cent during the same period, indicating a penchant among smaller city investors for simpler, more transparent investment options.
Vishal Jain, CEO of Zerodha Fund House, emphasises the role of accessible and affordable investment products in shaping the financial futures of individual small investors, underscoring the importance of empowering these communities with effective financial tools.
Moreover, the average investment size reveals a noticeable gap; the average ticket size for investors in smaller cities stands at approximately Rs1.13 lakh, while the combined average for T30 and B30 cities is significantly higher at Rs2.04 lakh.
The data indicates that as more individuals from smaller cities begin their investment journeys, there exists ample room for growth in both participation and investment size.
