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Business News/ Money / Calculators/  De-jargoned: B15
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De-jargoned: B15

It stands for beyond (top) 15 cities in MF parlance.

Jayachandran/MintPremium
Jayachandran/Mint

Traditionally, fund houses have been hesitant to penetrate beyond top 15 cities. So, the capital markets regulator, Securities and Exchange Board of India (Sebi), has incentivized fund houses to go to what is commonly referred to in MF parlance as—B15 cities. While B15 stands for beyond (top) 15 cities, T15 stands for top 15 cities. The Association of Mutual Funds in India (Amfi) has analysed inflows of fund houses, geography-wise, and has classified cities as T15 and B15 in the order of inflows that come from these places.

How B15 stacks up

As per data provided by Capitaline, asset management companies (AMC) whose corpus size is 10,000 crore or more get only about 13% (on average) of their total inflows from B15 cities. The data is as on September 2012. Effective August 2011, all AMCs are supposed to give geography-wise break-up of their inflows on their websites. UTI Asset Management Co. Ltd has the highest percentage of assets (26%) that comes from B15 towns. Large fund houses such as HDFC Asset Management Co. Ltd, Reliance Capital Asset Management Co. Ltd and SBI Funds Management Co. Ltd too have about 20% of their total asset coming from B15 cities. Note that these figures pertain to overall assets that include equity and debt MF schemes.

Added incentives

Last year Sebi allowed fund houses to charge an additional 30 basis points (bps) in the total expense ratio if new inflows from B15 cities are at least 30% of gross new inflows in the scheme or 15% of the average assets under management, whichever is higher. After Sebi’s nudge, many fund houses have revised their commission structure for distributors in B15 to incentivize them to get more investors. However, high commission is paid mainly for equity-oriented funds and monthly income plans where the fund houses thinks it can earn enough for itself, before passing out the rest to distributor as commission.

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Published: 25 Apr 2013, 03:33 PM IST
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