Mutual fund (MF) assets under management (AUM) are growing exponentially and eating into the share of bank deposits.
Since 2014-15, the share of MF AUM in bank deposits
has increased from 12.7 per cent to 18.6 per cent. The share of MFs
in incremental bank deposits
and AUM is 28 per cent, signalling that investors are increasingly moving away from traditional investment avenues.
“Households accessing MFs
is significant as it competes directly with bank deposits, which hitherto were the most-preferred vehicle for parking savings,” says a note by Care Ratings. “In FY18, there was conscious migration from bank deposits
as deposit rates had come down sharply making them less remunerative.”
“The higher growth rate witnessed in case of equity also reflects the changing risk profile of investors including household and corporates where there is an attempt to maximise returns by taking on a certain modicum of risk,” says Care Ratings.