The Assets Under Management (AUM) of passive funds has surged 6.4 times over the past six years, rising to ₹12.2 lakh crore from ₹1.91 lakh crore in 2019. Since March 2023, AUM has grown by 1.7 times, highlighting the accelerating adoption of passive investment strategies, according to the third edition of the Passive Survey 2025 released by Motilal Oswal Mutual Fund.
The survey gathered insights from more than 3,000 investors and over 120 distributors, including mutual fund distributors, registered investment advisors (RIAs), and wealth managers across India. Despite the high adoption rates, one-third of investors remain outside of passive investments, primarily due to a greater confidence in active funds or a lack of familiarity with passive products.
Key motivators for investors selecting passive funds include low costs (54%), diversification (46%), simplicity and transparency (46%), and performance (29%). The findings reflect a similar trend among distributors, with 93% of those surveyed possessing an understanding of passive funds. Among them, 46% demonstrate a deep knowledge of these products, and 70% incorporate them into their clients’ portfolios.
Most distributors (93%) intend to increase passive allocations by at least 5% in the current fiscal year. Presently, 70% of clients hold fewer than three passive funds, suggesting that passive investments currently play a supplementary role in their portfolios.
Pratik Oswal, Chief of Passive Business at Motilal Oswal AMC, noted that awareness of passive investments extends beyond basic index solutions, as investors increasingly accept factor-based funds and innovative passive strategies. With growing interest, passive investing is becoming a significant approach for those looking to engage in a disciplined method of long-term wealth creation.
Published on October 6, 2025.
