For a third year in a row, passively managed funds --index funds and ETFs-- have been the most favoured mutual fund categories among investors in 2022. One main reason is the underperformance of active largecap funds against their benchmarks. Passive funds aim to deliver market return with lower cost. Introduction of innovative investment avenues such as debt ETFs and smart beta ETFs have also attracted large investors such as corporates and high net worth individuals. Fixed income investors have opted target maturity funds as these schemes have invested in highest quality papers and offered relatively higher yield given in the lower interest rate regime.