Passive Funds' AUM jump 11-fold in six years to ₹9.62 lakh crore, here are complete details

Passive funds have been gaining new grounds, increasing their market share from 1.4% of the mutual fund industry’s assets under management (AUM) in 2015 to 17% in April-end 2024.

The total AUM of all passive funds jumped to more than ₹9.62 lakh crore by April 2024, up from ₹ 83,000 crore at the end of financial year (FY) 2018. This is an 11-fold spike in less than six years, as per the Association of Mutual Funds in India (AMFI) data.

Generally, passive funds comprises a total of 345 funds across equity generic index funds, equity sectoral index funds, and debt funds and exchange-traded funds (ETFs).

These 345 passive funds manage total AUM of ₹9,42,193 crore in the past week. The average return of these 342 passive fund stood at 30.86% over a one-year period. This despite including equity and debt index funds.

In terms of returns since inception, the average returns of these 345 funds stood at 17.08% on a compound annual growth rate (CAGR) basis.

Earlier, inflows into passive funds had experienced a dip after the change in debt fund taxation in April 2023. Subsequently, the numbers have witnessed an uptick in this calendar year (CY2024).

The rise in inflows has been driven largely by a surge in new index fund and ETF launches. In addition, there has been strong performance recorded in certain categories.

The aggregate inflows into passive funds was over ₹12,000 crore in March and April 2024, with the total CY2024 net inflows at ₹37,200 crore. The average monthly inflows in the previous six months stood at ₹3,263 crore.

Passive funds have been at the top of the one-year and three-year performance charts for a few months now. In categories like mid-cap and small-cap, passive funds have been leading in popularity for a significant part of the year.

Moreover, retail investors have been displaying an affinity for passive funds considering their low-costs and transparency.