Mutual Fund AUM to Bank Deposit Ratio Triples in 10 Years Driven by Changing Investor Preferences

India has witnessed a significant shift in its investment landscape over the past decade, with the mutual fund assets under management (AUM) to bank deposit ratio increasing nearly 3 times. 

This rise reflects growing investor interest in mutual funds, encouraged by rising incomes, better financial awareness and relatively lower returns on traditional savings instruments. 

Mutual Fund AUM-to-Bank Deposit Ratio Sees Threefold Surge 

According to data outlined in Franklin Templeton Mutual Fund’s Annual Outlook, the mutual fund AUM to bank deposit ratio rose from 12.6% in March 2015 to 33.5% in 2025.  

Over 10 years, bank deposits have grown nearly 3 times, while mutual fund AUM has increased more than 7 times. This highlights the growing preference for market-linked investment products among Indian investors. 

Key Factors Contributing to This Shift 

Multiple underlying factors have contributed to this shift. The decline in bank deposit interest rates over the years has made mutual funds an attractive alternative.  

Alongside, rising disposable incomes and higher financial literacy, especially among the younger population, have led to wider adoption of mutual funds. 

Intermittent Fluctuations in the Ratio 

The mutual fund AUM-to-bank deposit ratio hasn’t seen a straight incline. From 12.6% in March 2015, it reached 19.5% by March 2019.  

However, it dipped to 16.4% in March 2020. From there, it rose to 22.8% in 2022, slightly down to 21.8% in 2023, before moving up steadily to 33.5% in 2025. 

Read More: How Mutual Fund Commissions Eat Away 25% of Investor Wealth Across 80% of Schemes in a Decade! 

Comparison with Developed Markets 

Despite the growth, India still trails developed economies. For instance, the USA reports a mutual fund AUM-to-bank deposit ratio of over 200%.  

While Indian investors are increasingly shifting towards mutual funds, traditional bank deposits still make up a large part of investment portfolios. 

Conclusion 

The increase in the mutual fund AUM-to-bank deposit ratio indicates a changing investment mindset in India. Factors such as lower deposit returns, income growth and financial awareness have driven this shift despite some fluctuations over the years. 

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. 

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.