BIMARU states can no longer be considered sick (sick), if the strong growth of mutual fund assets managed by these states is something we can expect.
BIMARU is a term coined by demographer Ashish Bose in the 1980s to describe the poor economic conditions in Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh. Mutual fund assets under management in these four states have grown faster than the industry over the past year.
In fact, Uttar Pradesh, with assets under management of ₹3.19 lakh crore, has overtaken Tamil Nadu’s assets of ₹3.09 lakh crore to take sixth place in the overall rankings.
Sriram BKR, Senior Investment Strategist at Geojit Financial Services, said that among the top 10 states in terms of AUM, Gujarat, UP and Telangana have moved a step ahead to third, sixth and 10th in the rankings.
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In addition to growing prosperity in smaller cities, he said the mutual fund industry has done well to focus beyond the top 30 cities to bring in new investments.
In the last year ending November, mutual fund assets in Madhya Pradesh and Bihar rose 35 per cent and 40 per cent to ₹1.04 lakh crore and ₹67,895 crore, while that of Rajasthan rose 36 per cent to ₹1.27 lakh crore , according to Geojit insights.
The MF industry’s assets under management rose 33 per cent to ₹68.04 lakh crore in the past year.
With the presence of top companies and wealthy investors, Maharashtra topped the table with assets of ₹27.70 lakh crore and was far ahead of second-placed New Delhi with ₹5.59 lakh crore.
In 2012, SEBI gave special incentives to mutual funds to attract investments from smaller cities. However, it was suspended last March due to a few irregularities. The Systematic Investment Plan has been one of the main attractions in stimulating inflows from cities outside the top 30 (B-30).
According to the industry, more than 50 percent of live SIP accounts are from semi-urban and rural areas. The number of individual distributors in B-30 has also grown faster than in T-30 in recent years. Apart from this, the number of individual distributors and direct investors has also grown faster than in major cities.
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Ashwin Gupta, CEO of Wealth Advisors, said investors in small towns get excited when the equity markets deliver consistently good returns for a longer period of time.
“The online distribution channels have also helped MFs reach every nook and cranny of the country. The number of SIP accounts in B-30 cities at 54.7 million is much higher than the top 30 cities’ number of 46.5 million,” he added.
