Passive investing has gained popularity over the past two years. But do investors prefer index funds or exchange-traded funds? A break-up of assets under management of these funds from AMFI shows that retail assets have been on the rise in index funds over the past year while it was been subdued in ETFs. Investing in index funds is easier (just like a normal fund), but ETFs require demat and trading accounts. Also index funds allow SIPs. ETFs don't. These are the reasons, experts say, why index funds are more popular with retail investors. This was especially true during the pandemic, when SIPs have continued, but some ETF investors are said to have exited or taken money off the table.