The popularity of passive funds has been growing consistently with assets under management of all the exchange-traded funds (ETFs) and index funds that track the Nifty 50 indices surpassing the Rs 7 lakh crore mark in May-end.
As of May 31, 2023, there were 251 passive funds tracking 101 unique Nifty indices.
The Nifty indices linked passive funds account for about 72 percent of total equity and debt passive funds AUM and 75 percent of the total number of equity and debt passive funds in the country, the National Stock Exchange (NSE) said in a statement.
During the last five years, the asset base of passive funds has increased with an annualised growth rate of 53 percent. It rose from Rs 80,755 crore as on March 2018 to Rs 6.75 lakh crore in March 2023. During this period, the number of passive funds available in the country has also climbed from 90 to 349.
The AUM of the passive funds has shot up further to Rs 7.17 lakh crore as on May 31 this year, the exchange noted.
The financial year 2022-23 was a landmark year for the Indian passive funds industry as it registered record fund inflows of Rs 1.55 lakh crore and 121 new passive products were launched during the period.
Mukesh Agarwal, CEO, NSE Indices, said that passive funds are well suited for retail and institutional investors to invest in capital markets.
A passive fund is targeted at tracking the returns of the benchmark index, on the other hand, in active investing, the fund manager is entirely involved in the investment process.
Large international fund managers also launch ETFs linked to Nifty indices which are listed in global markets. Currently, there are 16 ETFs listed outside India with a combined AUM of $1.3 billion.
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