The recent surge in major benchmark indices and a consistent increase in inflows into bullion exchange-traded funds (ETFs) have allowed passive funds to outperform actively managed equity funds over the past year.
The assets under management (AUM) for passive funds rose by 21% last month to ₹13.67 lakh crore, compared to ₹11.30 lakh crore recorded in November 2024. In contrast, the AUM for actively managed equity funds climbed 16% last month to reach ₹35.17 lakh crore, up from ₹30.36 lakh crore.
Inflows into passive funds increased significantly to ₹16,668 crore, up from ₹7,061 crore, while inflows for actively managed equity funds declined by 31% to ₹24,690 crore, compared to ₹35,943 crore the previous year. Inflows specifically into gold ETFs surged to ₹7,743 crore, rising from ₹1,257 crore in November 2024, while their AUM has more than doubled to ₹1.02 lakh crore from ₹44,245 crore.
DP Singh, Deputy Managing Director of SBI Funds Management, noted that passive funds gained popularity due to heightened investor interest in gold and silver. However, he highlighted that bullion prices have recently corrected over the past two to three weeks, resulting in moderated inflows.
Singh recommended that investors consider multi-asset funds, which utilize bullion for hedging purposes while maintaining core equity investments, as a way to navigate the gold market.
Vikash Wadekar, Head of Passive Business at Axis AMC, commented on the increased efficiency in equity markets, stating that generating alpha has become more challenging. He also pointed out that SEBI’s categorization norms have led to greater portfolio standardization, which reduces opportunities for outsized positions that could yield significant alpha.
Hemen Bhatia, Executive Director and CEO of Angel One Asset Management Company, remarked on the critical role that digital platforms play in attracting new retail investors to index funds and ETFs as essential components of portfolio building. He stressed that the overwhelming amount of information in Indian markets makes it nearly impossible for active managers to consistently outperform the market.
N ArunaGiri, Founder and CEO of TrustLine Holdings, attributed the short-term underperformance of active funds to the sideways market conditions this year but suggested that changes may occur as foreign investors are expected to return early next year, buoyed by a US trade agreement and a slowdown in global AI trade.
Giri anticipates that a revival in market momentum could provide a more favorable environment for active strategies, potentially closing the performance gap and reversing recent trends.
Published on November 22, 2025.
