The number of new investors coming from smaller cities has been rising on a monthly basis. The mutual fund industry has added 2.3 crore investors (folios) from April to August 2024 of which more than 50% are from smaller cities.

Such trends can foster a culture of saving and investing, and ultimately contribute to long-term industry growth, according to a study by Zerodha Fund House.

However, smaller cities still account for only 19% of the overall assets under management (AUM) of the mutual fund industry. This indicates that while more individuals from these regions are participating in investments, the average investment size may still be lower compared to those from larger urban centres. These smaller cities are classified as B-30 cities (Beyond the top 30 cities) by the Association of Mutual Funds of India (AMFI).

As of August 2024, about 54% of all the 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 urbanized areas, said the study.