Listed Firms’ Investments in Mutual Funds Reach Record ₹3.8 Trillion in FY25

Investments by listed companies in mutual funds have surged to an all-time high of ₹3.8 trillion in FY25, reflecting a strategic shift in cash deployment amid sluggish capex plans and prevailing economic uncertainties. The rise points to a trend where firms are parking surplus cash into mutual funds, particularly fixed income schemes, due to limited growth opportunities and relatively low returns on bank deposits.

Record ₹3.8 Trillion in Mutual Fund Investments Signals Shift in Corporate Strategy

Data from the Centre for Monitoring Indian Economy (CMIE) reveals that 1,569 non-finance listed firms had collectively invested ₹3.8 trillion in mutual funds during FY25. This is the highest level since 1990-91 and surpasses the previous peak of ₹3.6 trillion recorded in FY21. These figures represent only a partial sample, with the full FY24 sample comprising 3,867 companies, indicating the actual number could be significantly higher.

Companies are deploying excess liquidity in mutual funds due to limited capex appetite. With capacity utilisation at 75.5% as of March 2025, firms are hesitant to invest in new production facilities, choosing instead to hold onto cash or seek safer returns.

Surplus Cash Reserves and Lower Deposit Rates Drive MF Allocations

Cash balances of non-finance companies reached a record ₹7.4 trillion in FY25, over double the ₹3.4 trillion held before the pandemic. Mutual fund investments as a percentage of total assets stood at 3.2%, consistent with the long-term trend. The peak was 4.3% in FY17, following demonetisation. This stable ratio suggests that while total cash has increased, firms continue to allocate a similar proportion to mutual funds.

Most investments are likely directed toward fixed income instruments as capital preservation remains the priority. Additionally, scheduled commercial banks offered average fresh deposit rates of 5.61% in July 2025, the lowest in 33 months, making mutual funds an attractive alternative.

Read More: 6 Equity Mutual Funds That Turned ₹1 Lakh into Over ₹4 Lakh in 7 Years!

Corporate MF Investments Total ₹23.6 Trillion Including Unlisted Firms

When expanded to include financial firms, unlisted companies, and investment holding entities, total corporate investments in mutual funds reached ₹23.6 trillion in FY25. This is a significant rise from ₹9.6 trillion in FY19. Non-equity allocations climbed 152% to ₹18.2 trillion, while equity investments rose 129% to ₹5.4 trillion during this period, indicating growing interest across asset classes.

Conclusion

Corporate investments in mutual funds are scaling new highs, driven by surplus liquidity, slow capex plans, and subdued deposit rates. While firms await clearer growth signals, mutual funds offer a strategic parking space for idle capital, a trend likely to persist in the near term.

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in Mutual Funds are subject to market risks. Read all related documents carefully before investing.