AUMs of mutual funds are growing and eating into share of bank deposits

Debt MFs offer 100-200 basis points higher returns as against bank deposits

Assets under management (AUMs) of mutual funds (MFs) are growing exponentially and eating into the share of bank deposits. Since 2014-15, share of MF AUM in bank deposits has increased from 12.7 to 18.6 per cent. The share of MFs in incremental bank deposits and AUM is 28 per cent, signaling that investors are moving away from traditional investment avenues.

“Households accessing MFs is significant, as it competes directly with bank deposits, which till now were the most preferred vehicle for parking savings,” said a note by CARE Ratings. “In 2017-18, there was migration from bank deposits to MFs, as