Passive Mutual Funds Surge: Driving Long-Term Wealth in India
Passive mutual funds in India are expanding rapidly, with assets projected to reach Rs 12.2 lakh crore by 2025. A Motilal Oswal survey highlights increased investor awareness and adoption, with a focus on low costs, diversification, and performance driving their popularity. Despite growth, some investors still favor active funds.
- Country:
- India
In a significant boost for passive mutual funds, assets under management are projected to rise to Rs 12.2 lakh crore by 2025, marking a six-fold increase since 2019, as revealed by a Motilal Oswal Mutual Fund survey released on Monday.
The survey, conducted among over 3,000 investors and 120 distributors, shows 76 percent awareness of Index Funds or ETFs, with 68 percent having invested in at least one passive fund by 2025. Yet, a third of investors remain unconvinced, preferring active funds due to confidence or unfamiliarity with passive options.
As passive strategies gain traction, the factors influencing investors include low costs (54 percent) and diversification (46 percent). Distributors are also on board, with 93 percent acknowledging passive funds and 70 percent incorporating them in portfolios, reflecting a growing trend towards passive investing for long-term wealth creation.
(With inputs from agencies.)
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