Mutual Fund vs Bank DPS in Bangladesh: Which Investment Option Is Better?

If you're wondering whether to invest in mutual funds or bank DPS (Deposit Pension Scheme) in Bangladesh, the answer is clear: For long-term wealth creation and higher returns, mutual funds are better (10-18% returns). For safety and guaranteed returns, bank DPS is better (8-9% returns). The official chairman of Bangladesh Securities and Exchange Commission (BSEC) has confirmed that investment in mutual funds is much more profitable than bank fixed deposits, with mutual funds capable of giving 10-18% dividend while bank deposits offer only 5-6%.

This comprehensive guide provides detailed comparison, real return calculations, tax benefits, expert recommendations, and expert analysis to help you make the right investment decision between mutual funds and bank DPS in Bangladesh's 2026 market.

What Is Bank DPS (Deposit Pension Scheme) in Bangladesh?

Bank DPS, or Deposit Pension Scheme, is a banking product where you deposit a fixed amount of money monthly for a fixed period (typically 1 year to 10 years) and receive predetermined returns at maturity. It's also known as recurring deposit or monthly deposit scheme.

Key Features of Bank DPS:

Guaranteed Returns:

• Fixed interest rate known at the time of investment
• No market risk - returns are guaranteed by bank
• Predictable income stream
• Monthly contributions with assured maturity amount

Interest Rates in 2026:

• DPS returns: 8% to 9% annually
• Some banks offer special schemes at 9.5%
• Monthly recurring deposit interest rates vary by bank
• Fixed and predictable returns

Investment Period:

• Minimum: 1 year
• Maximum: 10 years
• Common options: 1 year, 2 years, 3 years, 5 years, 10 years
• Monthly contributions required

Monthly Contribution:

• Minimum: BDT 500-1,000 typically
• No upper limit for most banks
• Flexible amounts based on bank policy

Safety Level:

• Very low risk
• Bank-deposited money insured up to certain limit
• Government-regulated banking system
• Principal protection guaranteed

Tax Treatment:

• 10% AIT (Advance Income Tax) charged on interest income
• Tax rebate up to BDT 18,000 maximum
• Investment up to BDT 120,000 qualifies for 15% rebate
• Interest income falls under taxable purview

What Is Mutual Fund in Bangladesh?

A mutual fund is a pooled investment vehicle where money from multiple investors is combined and invested in stocks, bonds, treasury securities, or other assets by professional fund managers. Investors receive units representing their share of the fund's portfolio.

Key Features of Mutual Funds:

Returns:

• Not guaranteed - depends on market performance
• Equity funds: 10-18% annual returns potential
• Debt/fixed-income funds: 8-10% annual returns
• Balanced funds: 9-12% annual returns
• SIP in mutual funds gives much higher returns than bank DPS

Risk Level:

• Equity funds: Moderate to high risk (market dependent)
• Debt funds: Low to moderate risk
• Balanced funds: Moderate risk
• NAV fluctuation possible

Investment Flexibility:

• No fixed period - open-ended funds allow anytime redemption
• SIP options for regular monthly investing
• Lump sum options available
• Minimum investment: BDT 1,000-5,000 typically
• Monthly SIP: BDT 5,000 for individuals, BDT 10,000 for institutions

Liquidity:

• High liquidity for open-ended funds
• Can liquidate assets in 3-5 business days
• No penalty on early withdrawal (unlike bank DPS)
• Flexible redemption anytime

Tax Benefits:

• Tax rebate up to BDT 75,000 for debt funds (15% of investment up to BDT 500,000)
• Tax rebate up to BDT 500,000 for equity funds (15% of investment up to BDT 5,000,000)
• 4 times higher tax rebate than bank DPS
• Mutual fund income does not fall under tax purview at fund level

Mutual Fund vs Bank DPS: Complete Comparison

1. Returns Comparison

Bank DPS Returns:

• Fixed return: 8% to 9% annually
• Guaranteed and predictable
• 5-6% general bank deposit rate
• Some special schemes: 9.5%
• Low return potential

Mutual Fund Returns:

• Variable return: 8% to 18% annually
• Equity funds: 10-12% typical, up to 18% potential
• Debt funds: 8-10% typical
• SIP mutual funds give much higher returns than bank DPS
• BSEC confirmed: 10-18% dividend capacity
• Can be high or low depending on market trends

Examples from 2024:

• UCB Income Plus Fund: 10.12% return
• Shanta First Income Fund: 9.84% return
• EDGE High-Quality Income Fund: 9.07% return
• EDGE AMC Growth Fund: 10.07% annualized return
• EDGE Bangladesh Mutual Fund: 9.31% annualized return

Winner for Returns: Mutual Fund (10-18% vs 8-9%)

2. Risk Comparison

Bank DPS Risk:

• Low risk (safe investment)
• Guaranteed returns with no market exposure
• Bank failure risk minimal (government-regulated)
• Principal protection guaranteed
• No volatility in returns

Mutual Fund Risk:

• Moderate to high risk for equity funds (market dependent)
• Low to moderate risk for debt funds
• Market-dependent returns
• No guaranteed returns
• NAV fluctuation possible

Winner for Safety: Bank DPS (guaranteed, low risk)

3. Liquidity Comparison

Bank DPS Liquidity:

• Can withdraw early but with penalty
• Premature liquidation reduces interest rate
• Lock-in period applies
• Limited flexibility
• Monthly contributions required

Mutual Fund Liquidity:

• Can sell anytime for open-ended funds
• Liquidate assets in 3-5 business days
• No penalty on early withdrawal
• High liquidity
• Flexible redemption
• No monthly contribution requirement

Winner for Liquidity: Mutual Fund (no penalty, faster access, flexible)

4. Tax Benefits Comparison

Bank DPS Tax Benefits:

• 10% AIT charged on interest income
• Tax rebate up to BDT 18,000 maximum
• Investment qualification: up to BDT 120,000
• Interest income taxable
• Limited tax advantage

Mutual Fund Tax Benefits:

• Tax rebate up to BDT 75,000 for debt funds (15% of BDT 500,000)
• Tax rebate up to BDT 500,000 for equity funds (15% of BDT 5,000,000)
• 4 times higher tax rebate than bank DPS
• Income does not fall under tax purview at fund level
• Direct and indirect tax advantages for investments
• Much better tax efficiency

Winner for Tax Benefits: Mutual Fund (up to 500,000 vs 18,000 BDT)

5. Investment Period Comparison

Bank DPS Period:

• Fixed period: 1 year to 10 years
• Common: 1 year, 2 years, 3 years, 5 years
• Must complete full period for promised return
• Early withdrawal reduces returns significantly
• Monthly contributions mandatory

Mutual Fund Period:

• No fixed period for open-ended funds
• SIP: flexible monthly investment
• Long-term recommended: 5+ years for equity funds
• Short-term suitable: 1-3 years for debt funds
• Redemption anytime without lock-in
• No monthly obligation

Winner for Flexibility: Mutual Fund (no lock-in, flexible, no obligation)

6. Minimum Investment Comparison

Bank DPS Minimum:

• Monthly: BDT 500-1,000 typically
• Total commitment: BDT 6,000-12,000 for 1 year
• Higher for better returns
• Mandatory monthly contributions

Mutual Fund Minimum:

• Lump sum: BDT 1,000 typically
• SIP: BDT 5,000 monthly for individuals
• BDT 10,000 monthly for institutions
• More accessible for retail investors
• No mandatory monthly obligation

Winner for Accessibility: Mutual Fund (lower minimum, flexible)

7. Professional Management Comparison

Bank DPS Management:

• No professional management
• Self-managed investment
• Passive income only
• No active strategy
• Fixed returns only

Mutual Fund Management:

• Professional fund managers with expertise
• Active portfolio management
• Research-driven investment decisions
• Diversified holdings
• Risk management by experts
• Strategic asset allocation

Winner for Management: Mutual Fund (professional expertise)

8. Diversification Comparison

Bank DPS Diversification:

• No diversification
• Single investment in bank
• Concentration risk
• Fixed income only
• No portfolio spread

Mutual Fund Diversification:

• High diversification across sectors
• Multiple stocks, bonds, securities
• Reduced concentration risk
• Portfolio spread across telecommunications, pharmaceuticals, financial services, energy
• Balanced risk through diversification
• Professional portfolio construction

Winner for Diversification: Mutual Fund (highly diversified)

9. Return Potential Over Time Comparison

Bank DPS Long-term:

• Fixed 8-9% annually
• Compound interest possible
• Predictable but limited growth
• Inflation may erode real returns
• Maximum 9% typically

Mutual Fund Long-term:

• 10-18% annual potential for equity
• Compounding through NAV growth
• Higher growth potential
• Can beat inflation significantly
• SIP maximizes compounding benefits
• Example: EDGE AMC Growth Fund 10.07% annualized

Winner for Long-term Growth: Mutual Fund (higher potential)

10. Inflation Protection Comparison

Bank DPS Inflation Protection:

• 8-9% returns vs 6-7% Bangladesh inflation
• Real return: 1-3% after inflation
• May partially protect against inflation
• Limited growth potential

Mutual Fund Inflation Protection:

• 10-18% returns vs 6-7% inflation
• Real return: 4-12% after inflation
• Significantly beats inflation
• Better wealth preservation
• Strong inflation hedge

Winner for Inflation Protection: Mutual Fund (beats inflation better)

11. SIP in Mutual Fund vs Bank DPS Comparison

SIP in Mutual Fund Benefits:

• Much higher returns than bank DPS
• 12% average returns vs DPS 8-9%
• Market timing advantage
• When market low, buy more units
• When market high, buy fewer units
• Average cost benefit
• Takes advantage of market volatility
• Tax rebate up to BDT 75,000-500,000
• 4 times higher than bank DPS
• Creates investment discipline
• Regular monthly savings habit
• Financial goal fulfillment
• Can withdraw anytime without penalty
• No lock-in period

Bank DPS Benefits:

• Guaranteed returns
• Fixed 8-9% annually
• No market risk
• Predictable income
• Simple to understand
• Easy process

Comparison Result:

• SIP Mutual Fund: 12% returns + higher tax rebate + flexibility
• Bank DPS: 8-9% returns + lower tax rebate + lock-in

Winner: SIP in Mutual Fund (higher returns, better tax benefits, flexibility)

12. Real Return Calculation: 100,000 BDT Investment Over 5 Years

Bank DPS Calculation (8.5% annual rate):

Principal: BDT 100,000
Annual Interest: 8.5%
5-Year Compound Return:

• Year 1: 100,000 × 1.085 = 108,500
• Year 2: 108,500 × 1.085 = 117,722
• Year 3: 117,722 × 1.085 = 127,729
• Year 4: 127,729 × 1.085 = 138,587
• Year 5: 138,587 × 1.085 = 150,367

Total Return After 5 Years: BDT 150,367
Profit: BDT 50,367
Annual Return: 8.5% guaranteed

After Tax (10% AIT):

• Annual tax: 10% of interest = 10% of 8,500 = BDT 850 per year
• 5-year tax: BDT 4,250
• Net Return After Tax: BDT 146,117

Tax Rebate:

• Maximum BDT 18,000 (for investment up to BDT 120,000)
• Net Return After Tax Benefit: BDT 164,117 (including tax rebate)

Mutual Fund Calculation (12% annual average for equity fund):

Principal: BDT 100,000
Annual Return: 12% (average equity fund return)
5-Year Compound Return:

• Year 1: 100,000 × 1.12 = 112,000
• Year 2: 112,000 × 1.12 = 125,440
• Year 3: 125,440 × 1.12 = 140,493
• Year 4: 140,493 × 1.12 = 157,352
• Year 5: 157,352 × 1.12 = 176,234

Total Return After 5 Years: BDT 176,234
Profit: BDT 76,234
Annual Return: 12% (not guaranteed, market-dependent)

Tax Benefit:

• Tax rebate: 15% of 100,000 = BDT 15,000 (equity fund up to 500,000 limit)
• No tax on fund returns
• Net Return After Tax Benefit: BDT 191,234 (including tax rebate)

Comparison Result:

Bank DPS Net Return: BDT 164,117 (after 10% AIT + tax rebate)
Mutual Fund Net Return: BDT 191,234 (including tax rebate)
Difference: BDT 27,117 more with mutual fund
Mutual Fund Advantage: 16.6% higher returns

Winner: Mutual Fund (16.6% higher returns with tax benefits)

Expert Recommendations and Official Statements

BSEC Chairman Official Statement:

Chairman of Bangladesh Securities and Exchange Commission (BSEC) Shibli Rubayat-Ul-Islam has officially stated:

"Investment in mutual funds is much more profitable than the fixed deposits in banks. The clients can now get 5 to 6 per cent interests on their bank deposits, but on the other hand, investments in mutual funds and in some shares is much more profitable. Mutual funds in the country now have the capacity to give 10 to 18 per cent dividend."

Analyst Recommendations:

Analysts believe open-ended mutual funds will be better investment tool than bank deposits

Reasons:

• Higher returns (10-18% vs 5-9%)
• Better tax benefits (4x higher rebate)
• More liquidity (no penalty)
• Professional management
• Diversification benefits

SIP Recommendation for Middle Class:

• Start SIP in mutual fund for monthly investing
• Reduces risk and gets good long-term returns
• Maintain liquid fund for emergency access
• Invest in both bank DPS and mutual funds for balanced approach

Expert Investment Tips:

For Balanced Approach:

• Invest in both bank DPS and mutual funds
• Bank DPS for security and short-term needs
• Mutual funds for long-term wealth
• Balanced mix achieves both safety and growth

Return Analysis from 2024:

• UCB Income Plus Fund: 10.12%
• Shanta First Income Fund: 9.84%
• EDGE High-Quality Income Fund: 9.07%
• All debt funds outperformed bank DPS (8-9%)

When Should You Choose Bank DPS?

Choose Bank DPS if:

1. You Need Guaranteed Returns

• Fixed income is essential
• No tolerance for return variability
• Predictable cash flow required
• Monthly predictable income

2. You Have Very Low Risk Tolerance

• Cannot accept any market risk
• Prefer safety over higher returns
• Conservative investor profile
• Peace of mind priority

3. Short-Term Investment (1-3 Years)

• Need money within 1-3 years
• Short-term financial goal
• Emergency fund building
• Guaranteed returns for short horizon

4. You're Retired or Near Retirement

• Need stable income
• Cannot afford capital loss
• Preserve principal
• Regular monthly income

5. You Want Monthly Discipline

• Automatic monthly savings
• Forced investment discipline
• Regular contribution habit
• No temptation to skip

6. You Don't Want Professional Management

• Prefer passive investment
• No interest in market monitoring
• Simple investment structure
• Easy to understand

7. Emergency Fund

• Need structured savings
• Safety priority over returns
• Guaranteed maturity amount

When Should You Choose Mutual Fund?

Choose Mutual Fund if:

1. You Want Higher Returns

• Seek 10-18% annual returns vs 8-9% DPS
• Long-term wealth creation goal
• Can accept market variability
• Maximum growth potential

2. You Have Moderate to High Risk Tolerance

• Comfortable with market fluctuations
• Understand investment risk
• Long-term investment horizon
• Risk awareness

3. Long-Term Investment (5+ Years)

• Building wealth for future
• Child education, retirement planning
• Can ride through market volatility
• Time to recover from downturns

4. You Want Maximum Tax Benefits

• Maximize tax rebate up to BDT 500,000
• Reduce tax liability legally
• Tax-efficient investing
• 4x higher rebate than DPS

5. You Want Professional Management

• Prefer expert fund managers
• Don't want to pick individual stocks
• Want diversified portfolio
• Strategic asset allocation

6. You Want Liquidity Without Penalty

• Need flexibility to redeem anytime
• No lock-in period preference
• Quick access to money
• Emergency access

7. You Want to Beat Inflation

• 10-18% returns vs 6-7% inflation
• Real wealth preservation
• Growth above inflation
• Strong inflation hedge

8. You Want SIP Benefits

• Regular monthly investing
• Market timing advantage
• Compounding maximization
• No mandatory obligation

Risk Factors Comparison

Bank DPS Risk Factors:

Low Risk:

• Fixed returns guaranteed
• Principal protected
• Bank failure risk minimal
• Government-regulated
• No market exposure

Limitations:

• Lower returns may not beat inflation significantly
• 10% AIT on interest reduces net returns
• Lock-in period for promised return
• Limited growth potential
• Early withdrawal penalty

Mutual Fund Risk Factors:

Market Risk:

• Returns not guaranteed
• NAV fluctuation possible
• Market-dependent performance
• Equity funds: moderate to high risk

Risk Management:

• Debt funds: low to moderate risk
• Diversification reduces single-stock risk
• Professional fund management
• Can choose fund based on risk tolerance

Mitigation Strategies:

• Invest in debt funds for lower risk
• Use SIP to average costs
• Long-term investing reduces volatility risk
• Diversify across fund types

Tax Efficiency Deep Comparison

Bank DPS Tax Treatment:

Tax Charged:

• 10% AIT on interest income
• Interest income falls under taxable purview
• No tax advantage at account level

Tax Rebate:

• Maximum BDT 18,000
• Investment qualification: up to BDT 120,000
• 15% of investment amount
• Limited rebate ceiling

Example:

• DPS interest: BDT 8,500 (8.5% of 100,000)
• AIT deducted: BDT 850 (10%)
• Net interest: BDT 7,650
• Tax rebate: BDT 18,000 maximum (if qualifies)
• Total benefit: 8.5% return + 18,000 rebate

Mutual Fund Tax Treatment:

Tax Benefits:

• No tax at fund level
• Income does not fall under tax purview at fund level
• Direct and indirect tax advantages

Tax Rebate:

• Debt funds: up to BDT 75,000 (15% of BDT 500,000 investment)
• Equity funds: up to BDT 500,000 (15% of BDT 5,000,000 investment)
• 4 times higher than bank DPS

Example (Equity Fund):

• Investment: BDT 100,000
• Tax rebate: BDT 15,000 (15%)
• Returns: BDT 12,000 (12%)
• No tax on returns at fund level
• Total benefit: 12% return + 15,000 rebate = significantly higher

Winner: Mutual Fund (significantly better tax efficiency)

Liquidity Deep Comparison

Bank DPS Liquidity:

Early Withdrawal:

• Can withdraw early but with penalty
• Reduced interest rate for incomplete period
• Lock-in period applies
• Significant penalty possible

Processing Time:

• 1-3 business days typically
• Bank approval required
• Formalities involved
• Monthly obligation continues

Mutual Fund Liquidity:

Redemption:

• Can sell anytime for open-ended funds
• No penalty on early withdrawal
• No lock-in period
• Flexible exit

Processing Time:

• Can liquidate assets in 3-5 business days
• Faster than bank premature withdrawal
• NAV-based redemption
• Quick processing

Flexibility:

• Partial redemption allowed
• Full or partial exit
• Flexible timing
• No monthly obligation

Winner: Mutual Fund (no penalty, faster, more flexible)

Best Investment Strategy: Balanced Approach

Recommended Portfolio Allocation:

Conservative Investors (Low Risk):

• 70% Bank DPS (safety)
• 30% Debt Mutual Fund (higher returns + tax benefits)
• Expected return: 7-9% annually

Moderate Investors (Medium Risk):

• 50% Bank DPS (safety)
• 50% Balanced Mutual Fund (growth + income)
• Expected return: 9-12% annually

Aggressive Investors (High Risk):

• 20% Bank DPS (emergency fund)
• 80% Equity Mutual Fund (maximum growth)
• Expected return: 12-18% annually

Salaried Middle Class Recommended:

• Invest in both bank DPS and mutual funds
• DPS for security and short-term needs
• Mutual funds for long-term wealth
• Start SIP for disciplined monthly investing
• Maintain liquidity for emergency

Common Mistakes to Avoid

Mistake 1: Choosing Only Bank DPS for Long-Term

Problem:

• 8-9% returns may not beat inflation significantly
• Limited wealth creation
• Tax inefficient (10% AIT + limited rebate)
• Lower returns vs mutual funds

Solution:

• Allocate portion to mutual funds for long-term
• 10-18% potential returns beat inflation better
• Better tax benefits (4x higher rebate)

Mistake 2: Choosing Only Mutual Fund for Short-Term

Problem:

• Market risk for short-term goals
• Return variability
• NAV fluctuation possible
• Not suitable for guaranteed returns

Solution:

• Use bank DPS for short-term (less than 3 years)
• Use mutual fund for long-term (5+ years)
• Balanced approach for different time horizons

Mistake 3: Ignoring Tax Benefits

Problem:

• Missing BDT 75,000-500,000 rebate potential
• Reducing net returns unnecessarily
• Not optimizing tax efficiency

Solution:

• Consider tax rebate in investment decision
• Mutual funds offer 4x higher rebate than bank DPS
• Maximize tax-efficient investing

Mistake 4: Not Considering Liquidity Needs

Problem:

• Bank DPS lock-in penalty
• Emergency fund not accessible
• Inflexible investment structure
• Monthly obligation burdensome

Solution:

• Maintain liquid portion in bank DPS/savings
• Invest long-term portion in mutual funds
• Flexible redemption options

Mistake 5: Not Using SIP for Regular Investing

Problem:

• Missing compounding benefits
• Timing risk
• No investment discipline
• Lower returns potential

Solution:

• Start SIP in mutual fund
• Regular monthly investing reduces risk
• Maximizes compounding returns
• Market timing advantage

Frequently Asked Questions (FAQ)

Q1: Which gives higher returns - mutual fund or bank DPS?

Mutual funds give higher returns. Mutual funds can provide 10-18% annual returns while bank DPS offers only 8-9%. BSEC Chairman confirmed mutual funds are much more profitable than bank deposits.

Q2: Is mutual fund safer than bank DPS?

Bank DPS is safer. Bank DPS offers guaranteed returns with low risk, while mutual fund returns are market-dependent with moderate to high risk for equity funds. Choose bank DPS for safety, mutual fund for higher returns.

Q3: What is the return difference between mutual fund and bank DPS?

Mutual fund: 10-18% annual returns (equity), 8-10% (debt)
Bank DPS: 8-9% annual returns
Difference: 2-10% higher returns with mutual funds

Q4: Which is better for tax benefits - mutual fund or bank DPS?

Mutual funds offer significantly better tax benefits. Tax rebate up to BDT 500,000 for equity mutual funds vs only BDT 18,000 for bank DPS. That's 4 times higher tax rebate.

Q5: Can I withdraw mutual fund investment anytime like bank DPS?

Yes, open-ended mutual funds allow redemption anytime without penalty. Bank DPS has lock-in period and early withdrawal penalty. Mutual funds are more liquid.

Q6: Which is better for long-term investment - mutual fund or bank DPS?

Mutual fund is better for long-term (5+ years). Higher returns (10-18% vs 8-9%), better inflation protection, and compounding benefits make mutual funds superior for long-term wealth creation.

Q7: Which is better for short-term investment - mutual fund or bank DPS?

Bank DPS is better for short-term (less than 3 years). Guaranteed returns, no market risk, and predictable income make bank DPS suitable for short-term goals.

Q8: What does BSEC say about mutual fund vs bank DPS?

BSEC Chairman stated: "Investment in mutual funds is much more profitable than bank fixed deposits. Clients can get 5-6% on bank deposits, but mutual funds have capacity to give 10-18% dividend."

Q9: Is SIP in mutual fund better than bank DPS?

Yes, SIP in mutual fund gives much higher returns than bank DPS. SIP offers 12% average returns vs DPS 8-9%, plus 4 times higher tax rebate and flexibility without lock-in.

Q10: What should middle-class salaried people invest - mutual fund or bank DPS?

Invest in both for balanced approach. Bank DPS for security and short-term needs, mutual funds for long-term wealth growth. Start SIP for disciplined monthly investing.

Q11: Which beats inflation better - mutual fund or bank DPS?

Mutual fund beats inflation better. 10-18% returns vs 6-7% Bangladesh inflation gives 4-12% real return, while bank DPS's 8-9% gives only 1-3% real return after inflation.

Q12: How much time to liquidate mutual fund vs bank DPS withdrawal?

Mutual fund: 3-5 business days without penalty
Bank DPS premature: 1-3 business days with penalty
Mutual fund has faster processing without penalty.

Q13: What is the minimum investment for mutual fund vs bank DPS?

Mutual fund: BDT 1,000 lump sum, BDT 5,000 monthly SIP
Bank DPS: BDT 500-1,000 monthly
Mutual fund has lower lump sum entry, similar SIP minimum.

Q14: Can retired people invest in mutual fund?

Yes, but debt mutual funds are better for retired people. Lower risk (8-10% returns) with regular income through dividends. Bank DPS also suitable for guaranteed income.

Q15: What is the best investment mix for balanced approach?

50% Bank DPS for safety + 50% mutual fund for growth. Conservative: 70% DPS + 30% debt fund. Aggressive: 20% DPS + 80% equity fund.

Real 2024 Mutual Fund Performance Data

Debt Fund Returns (2024):

• UCB Income Plus Fund: 10.12%
• Shanta First Income Fund: 9.84%
• EDGE High-Quality Income Fund: 9.07%

All debt funds outperformed bank DPS (8-9%) in 2024.

Equity Fund Returns:

• EDGE AMC Growth Fund: 10.07% annualized
• EDGE Bangladesh Mutual Fund: 9.31% annualized

Balanced Fund Returns:

• VIPB Balanced Fund: 4.91% (lower due to market conditions)
• VIPB SEBL 1st Unit Fund: 3.81%

Final Verdict: Mutual Fund vs Bank DPS

For Higher Returns: MUTUAL FUND WINS

• Returns: 10-18% vs 8-9%
• 16.6% higher returns in 5-year calculation
• Better long-term wealth creation
• Beats inflation significantly

For Safety and Guaranteed Returns: BANK DPS WINS

• Guaranteed fixed returns
• Low risk investment
• Principal protection
• No market volatility

For Tax Benefits: MUTUAL FUND WINS

• Tax rebate up to BDT 500,000 vs BDT 18,000
• 4 times higher tax rebate
• No tax at fund level
• Better tax efficiency

For Liquidity: MUTUAL FUND WINS

• No penalty on early withdrawal
• 3-5 business days liquidation
• Flexible redemption
• No lock-in period

For Short-Term Goals: BANK DPS WINS

• Guaranteed returns for less than 3 years
• No market risk
• Predictable income
• Safety priority

For Long-Term Goals: MUTUAL FUND WINS

• Higher returns for 5+ years
• Compounding benefits
• Inflation protection
• Wealth creation

The Bottom Line Recommendation

Choose Bank DPS if:

• You need guaranteed returns
• Very low risk tolerance
• Short-term investment (less than 3 years)
• Retired or near retirement
• Want monthly discipline
• Emergency fund building

Choose Mutual Fund if:

• You want higher returns (10-18%)
• Moderate to high risk tolerance
• Long-term investment (5+ years)
• Want maximum tax benefits (up to BDT 500,000)
• Need liquidity without penalty
• Want to beat inflation
• Want SIP benefits

Best Strategy: BALANCED APPROACH

• Invest in BOTH for different purposes
• Bank DPS for safety and short-term needs
• Mutual Fund for long-term growth and wealth creation
• 50% DPS + 50% Mutual Fund for moderate investors
• Start SIP for disciplined monthly investing

For most Bangladesh investors in 2026:
Mutual funds are the better choice for long-term wealth creation, offering significantly higher returns (10-18% vs 8-9%), better tax benefits (up to BDT 500,000 vs BDT 18,000), and superior liquidity. However, maintain portion in bank DPS for safety and emergency needs.

Official BSEC Confirmation: Investment in mutual funds is much more profitable than bank deposits, with mutual funds capable of giving 10-18% dividend while bank deposits offer only 5-6%.

Start your investment journey today with proper diversification between bank DPS and mutual funds based on your goals, risk tolerance, and time horizon. For mutual fund investment guidance and latest NAV updates, follow biniyog.com.bd - your trusted partner in smart investing in Bangladesh.