Total mutual funds asset base of North East more than doubles in 4 years

The share of North East in overall mutual fund assets in the country more than doubled in the last four years to Rs 40,324 crore in March 2024, spurred by increased awareness and growing interest among retail investors to invest in equities, a report by ICRA Analytics said.

Also, this signals a growing appetite among investors from smaller towns and cities to invest in mutual funds.

The combined share of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, and Tripura rose to 0.73% of the total average asset under management (AAUM) of the mutual fund industry, which stood at Rs 55.01 lakh crore in March 2024. The share was around 0.67% in March 2020, when the industry’s AAUM was at Rs 24.71 lakh crore. Data for Sikkim was not provided.

In March 2020, these states had an asset base of Rs 16,446 crore as compared to Rs 40,324 crore in March this year.

"Though the contribution of these states to the total AAUM of the industry is still small in percentage terms, there has been a steady and consistent growth in mutual fund inflows in these states backed by increasing awareness among people and the growing interest among retail investors for investing in equities through the mutual fund route," Ashwini Kumar, Senior Vice President and Head Market Data, ICRA Analytics, said.

With an AAUM of Rs 29,268 crore, Assam was the leading contributor among northeastern states, accounting for nearly 73% of the total AAUM of Rs 40,324 crore of these states in March 2024. AAUM of Assam grew nearly 159% from Rs 11,298 crore in March 2020.

Meghalaya accounted for 9% of the total AAUM at Rs 3,623 crore in March 2024 as compared with Rs 1,714 crore in March 2020. Tripura accounted for 5% of the total asset base at Rs 2,174 crore in March this year, up from Rs 1,155 crore in March 2020.

Further, Nagaland contributed 4% of the total asset base at Rs 1,668 crore, way higher than Rs 965 crore in March 2020. Arunachal Pradesh contributed 3.8% at Rs 1,532 crore in the period under review, up from Rs 525 crore in March 2020.

Manipur's share was 2.9% at Rs 1,152 crore, an increase from Rs 403 crore in March 2020 and Mizoram accounted for 2.25% at Rs 907 crore, up from Rs 386 crore in March 2020, it added.

"There has been a steady increase in awareness about the various investment options among people, primarily from smaller towns and cities. This, coupled with growing financial literacy and the surge in interest among retail investors for investing in equities through the mutual fund route, all contribute to good growth in AAUM in towns and cities beyond the top 30," Kumar said.

"The investor awareness campaigns conducted by AMCs (asset management companies) in the northeastern region have also helped build awareness among people,” he added.

However, he pointed out that mutual fund penetration still continues to be low in the country and there is a lot of scope for growth. The burgeoning middle class and rising financial literacy are likely to prompt more and more people to resort to financial planning so as to accrue savings and this is expected to shore up mutual fund investments in northeastern states moving forward.

Overall, the Indian mutual fund industry continues its growth momentum with an increase in inflows across both debt and equity-oriented schemes in April 2024.

The net AUM of the industry, which posted 35% growth in 2023-24, continued to register a stellar performance in April 2024 as it surged by nearly 38% year-on-year to Rs 57.26 lakh crore as compared with Rs 41.62 lakh crore in April 2023.