Passive mutual fund schemes have gained significant traction in the investment landscape, especially in the wake of the sharp fall in key indices in recent months. According to the latest data from the Association of Mutual Funds in India (AMFI), new folios opened in the passive fund category surged by 37% in the past year, with assets under management (AUM) crossing ₹11 lakh crore in 2024, representing a 24% increase.
The growing interest in passive funds has led to the launch of 122 new schemes by various mutual fund houses. Nippon India Mutual Fund stands out as a market leader in this space, boasting an AUM of ₹1.65 lakh crore across 1.46 crore folios in passive funds. The company also accounts for 55% of the trading volume in Exchange-Traded Funds (ETFs).
Other major players in the industry, including Kotak MF, Axis MF, Birla MF, and Motilal Oswal MF, have also reported robust growth in passive fund assets through the introduction of new funds. Arun Sunderasan, Head of ETFs at Nippon India MF, highlighted the unique value proposition of passive funds, emphasizing their pure exposure to various market segments and their transparent, true-to-label nature.
Nippon India MF alone launched 8 new passive funds in the previous year, adding to its existing portfolio of 24 ETFs and 21 index funds. The broader mutual fund industry has witnessed a wave of passive fund launches to cater to the increasing investor demand for low-cost, easily understandable investment options.
Passive funds are particularly appealing to both retail and seasoned investors due to their lower cost structure and straightforward investment approach. As investors seek diversified portfolios with different risk-return profiles, passive funds offer a compelling solution to meet their investment objectives.
In conclusion, the rise of passive mutual fund schemes reflects a shifting investment landscape where investors are increasingly seeking efficient, cost-effective investment options amidst market volatility. With a plethora of passive fund choices now available in the market, investors have more opportunities to diversify their portfolios and align their investments with their financial goals.
