Mutual Funds' Assets Grow To Nearly Third Of Bank Deposits In India

The trend of investors choosing mutual funds over bank deposits has continued as the share of assets managed by mutual funds grew to over 31% of the size of bank deposits, according to a Franklin Templeton report for August.

Assets under management held by mutual funds grew to their highest ever at the end of August at Rs 66.7 lakh crore, as per the monthly figures released by the Association of Mutual Funds in India.

The figure has increased to triple the size since March 2020, and at a compound annual growth rate of 27% over a period of four years.

This has been led mainly by steady inflows into equity mutual funds amid a stellar bull run in the markets, supported by robust flows through the systematic-investment-plan route.

Monthly flows received via the SIP route have continued to hit fresh highs for the 16th consecutive month in August at Rs 23,547 crore, while actively managed mutual funds recorded inflows for the 42nd month in a row.

Over the four-year period, investments in actively managed equity mutual funds have steadily gained in popularity, with the asset base crossing those of actively managed debt mutual funds in March 2022.

At the same time, deposits have largely been a point of concern for the Indian banking system, where the loan to deposit ratio stood at 77.2% as of Aug. 9, above 77% for the 10th month in a row, near its all-time high of 78.8% in September 2013.