Despite the market volatility, inflows into mutual fund beat bank FDs

Mutual fund inflows surpass bank deposits as young investors embrace risk for long-term wealth creation.

Despite volatility in the equity market, mutual fund inflows over the past 11 months have far exceeded bank deposits,

In the last 11 months of the current fiscal, growth in banks’ time (fixed) deposits slowed to 9.2% (or up by ₹17.29-lakh crore) against 11.2% (₹18.69-lakh crore) in the year ago period, per RBI data.

In the same period, inflows into mutual funds were up 90% at ₹9.79-lakh crore (₹5.14-lakh crore), according to the Association of Mutual Funds in India data.

In fact, the growth in overall bank deposit slowed compared to that of mutual funds. Bank deposits, including savings bank and time deposits, have grown 8% year-on-year to ₹231-lakh crore against ₹213-lakh crore as at February-end 2024.

In the same period, MF industry recorded a 24% rise in AUM at ₹68-lakh crore (₹55 lakh crore).

Sunil Subramaniam, CEO of an independent think-tank Sense and Simplicity, said mutual funds will continue to attract more money than bank deposit as young investors are willing to take the additional risk for creating long-term wealth.

Even after all the noise and the recent fall in equity markets, the three-year MF equity returns are positive and investors are confident of beating market volatility through SIPs, he said.