60% of 2025 NFO launches were passive, but active schemes saw higher mobilisation

The weak response to passive NFOs stood in contrast to strong monthly inflows into existing passive schemes during the year. Between January and November 2025, cumulative inflows into passive categories stood at about Rs1.35 lakh crore.

Mutual fund launches in 2025 highlighted a sharp divergence between the number of schemes introduced and where investor money ultimately flowed.

Between January and November, fund houses launched 204 schemes, mobilising about Rs 83,064 crore. Passive funds dominated the launch pipeline, accounting for 121 schemes, or nearly 60 percent of all NFOs (New Fund Offers) during the year. Yet, these schemes raised only Rs 6,371 crore, contributing less than 8 percent of total NFO mobilisation.

A closer look at the passive segment shows that index funds drove almost the entire NFO flow, despite being fewer in number than ETFs (Exchange-Traded Funds) .

Across the year, 72 index fund launches mobilised roughly Rs 6,424 crore. March was the standout month, when 11 index fund NFOs alone raised Rs 2,049 crore, forming the bulk of passive inflows for the year.

ETFs, meanwhile, dominated the launch count but struggled to attract money at the NFO stage. Around 63 ETF launches together raised just about Rs 580 crore during the year, with monthly collections typically remaining modest despite steady issuance, particularly in the second half. October underscored this trend, as eight ETF launches garnered only Rs 59 crore.

Gold ETFs remained marginal. Sporadic launches through the year raised under Rs 100 crore in total, with limited interest seen even during periods of market volatility.

Active schemes, by contrast, attracted the bulk of investor money. A total of 83 active schemes across equity, debt and hybrid categories — accounted for just over 40 percent of the launches but mobilised more than Rs 76,693 crore, or over 92 percent of the total NFO collections.

Debt funds led active inflows, raising Rs 41,305 crore (through 17 schemes), driven largely by a handful of large launches in June and July that drew sizeable institutional and corporate participation. Equity schemes mobilised Rs 27,120 crore, with flows clustering in months when market sentiment was supportive. Hybrid schemes added Rs 6,584 crore, delivering steady, though moderate, collections across the year.

Ventura’s Juzer Gabajiwala explains that many passive funds today are not passive in the true sense. “True passive investing works best when you are tracking broad, independently constructed indices like the Nifty 50, Sensex, Nifty 100 or Nifty 500,” he says.

However, he points out that a large number of the recent passive launches are based on narrow themes or factor strategies—sectoral indices, momentum, quant or thematic ideas—where the index itself is often created specifically for a fund house. “In many cases, the fund house is effectively designing the index and then marketing it as a passive product,” Gabajiwala says.

Monthly inflows remain strong

According to Gabajiwala, this limits broader participation. “These indices are not widely used or replicated across the industry, so collections tend to be driven more by marketing than by natural investor demand,” he adds.

The weak response to passive NFOs stood in contrast to strong monthly inflows into existing passive schemes during the year. Between January and November 2025, cumulative inflows into passive categories stood at about Rs 1.35 lakh crore. Index funds alone attracted nearly Rs 25,700 crore over the period, with steady monthly additions despite limited appetite for new launches.

ETFs accounted for the bulk of flows during the year. Other (non-gold) ETFs recorded cumulative inflows of around Rs 75,800 crore, driven by sharp spikes in March and April—when monthly inflows crossed Rs 10,000 crore and Rs 19,000 crore, respectively. Gold ETFs drew about Rs 31,300 crore, with inflows accelerating sharply in September and October amid heightened market uncertainty.

Investors, Gabajiwala notes, prefer established index funds and ETFs with a performance track record and scale. “ETFs, in particular, attract large flows, especially from institutions and pension funds, because they offer liquidity, lower costs and the ability to transact directly on the exchange,” he says.

At the NFO stage, however, investor behaviour is different. “Most investors are still chasing returns, and a new passive fund has no history to show,” Gabajiwala says. With markets remaining muted this year and risk appetite subdued, he adds that investors have also gravitated towards gold and silver rather than equity-linked themes. “Unless an NFO comes with a very simple and compelling proposition, it becomes difficult to attract flows in such an environment,” he says.