Passive mutual funds in India have experienced significant growth, with assets under management (AUM) projected to reach ₹12.2 lakh crore by 2025—an increase of over six-fold from ₹1.91 lakh crore in 2019, according to a survey released by Motilal Oswal Mutual Fund on Monday.
Since March 2023, the asset base has expanded 1.7 times. The survey, which included insights from over 3,000 investors and more than 120 distributors—including mutual fund distributors, registered investment advisers, and wealth managers—revealed that 76 percent of mutual fund investors recognized Index Funds or ETFs in 2025.
Additionally, 68 percent of surveyed investors reported having invested in at least one passive fund this year, up from 61 percent in 2023. Despite this growth in adoption, one-third of investors remain hesitant, citing greater confidence in active funds or a lack of familiarity with passive products.
The third edition of the Motilal Oswal Mutual Fund Passive Survey 2025 identified key factors influencing investor choices for passive funds: low costs (54 percent), diversification (46 percent), simplicity and transparency (46 percent), and performance (29 percent).
The distributor survey echoed these trends, showing that 93 percent of respondents understood passive funds, with 46 percent possessing in-depth knowledge. Moreover, 70 percent of distributors include passive funds in their clients’ portfolios, and they aim to increase passive allocation by at least 5 percent in FY25-26. Currently, 70 percent of their clients hold fewer than three passive funds, indicating that passive investments often play a satellite role in their portfolios.
“Passive strategies have seen considerable growth in India, evolving from a niche investment option to one embraced by a wider investor base,” stated Pratik Oswal, Chief of Passive Business at Motilal Oswal AMC. He noted that awareness now extends beyond broad-based index solutions, as investors are increasingly open to factor-based funds and innovative passive strategies. This shift indicates a growing interest in passive investing as a disciplined method for long-term wealth creation.
For Indian investors, financial independence remains the primary objective, with 61 percent citing it as their goal, followed by retirement planning (49 percent), and portfolio diversification (31 percent).
The survey also demonstrated a strong long-term investment orientation, with 85 percent of participants holding their investments for more than three years. In terms of investment styles, 57 percent preferred a combination of systematic investment plans (SIPs) and lump sum investments, while 26 percent exclusively used SIPs, and 17 percent favored solely lump sum investing. Investors reported relying on financial websites, newspapers, social media, and television for their investment information.
Published on October 6, 2025.
