Passive Mutual Funds in India Witness Remarkable Growth, AUM Reaches Rs 12.2 Lakh Crore
Passive mutual funds in India have seen significant growth, with Assets Under Management (AUM) reaching Rs 12.2 lakh crore, marking a 6.4-fold increase from 2019 to 2025. A survey by Motilal Oswal Mutual Fund reveals 76% of investors are aware of Index Funds or ETFs, and 68% have at least one passive fund in 2025, up from 61% in 2023. Key factors driving passive fund selection include low costs (54%), diversification (46%), and simplicity (46%). 93% of distributors understand passive funds, with 70% including them in client portfolios. Indian investors primarily seek financial independence (61%) and retirement planning (49%), with 85% holding investments for over three years.
*this image is generated using AI for illustrative purposes only.
Passive mutual funds in India have experienced a significant surge in popularity, with assets under management (AUM) reaching new heights. According to recent data, the AUM of passive funds has skyrocketed to Rs 12.2 lakh crore, marking a substantial increase in the investment landscape.
Impressive Growth Trajectory
The growth of passive mutual funds in India has been nothing short of remarkable:
| Year | AUM (in Rs Lakh Crore) | Growth |
|---|---|---|
| 2019 | 1.91 | - |
| 2023 | 7.18 | 3.8x |
| 2025 | 12.20 | 6.4x |
This data showcases a 6.4-fold increase from 2019 to 2025, with the asset base growing approximately 1.7 times since 2023.
Investor Awareness and Participation
A survey conducted by Motilal Oswal Mutual Fund, covering over 3,000 investors and 120 distributors, revealed interesting insights:
| Metric | Percentage |
|---|---|
| Investors aware of Index Funds or ETFs | 76% |
| Investors with at least one passive fund (2025) | 68% |
| Investors with at least one passive fund (2023) | 61% |
The survey highlights a growing trend of investor participation in passive funds, with a 7% increase in just two years.
Factors Driving Passive Fund Selection
Investors cited several key factors influencing their decision to choose passive funds:
| Factor | Percentage |
|---|---|
| Low costs | 54% |
| Diversification | 46% |
| Simplicity and transparency | 46% |
| Performance | 29% |
Distributor Perspective
The survey also shed light on the distributor's view of passive funds:
- 93% of distributors understand passive funds
- 70% include passive funds in client portfolios
- 93% plan to increase passive allocation by at least 5% in the future
Investment Goals and Strategies
Indian investors primarily seek:
- Financial independence (61%)
- Retirement planning (49%)
Investment behavior:
- 85% hold investments for more than three years
- 57% prefer a combination of Systematic Investment Plans (SIPs) and lump sum investments
This data indicates a long-term investment approach among Indian investors, aligning well with the nature of passive funds.
The remarkable growth in passive mutual funds reflects a shifting trend in the Indian investment landscape. As more investors recognize the benefits of low-cost, diversified, and transparent investment options, passive funds are likely to continue gaining traction in the coming years.
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