Passive funds' assets rise to Rs 13.73 lakh crore from Rs 3.09 lakh crore five years ago

Mumbai, November 14, 2026: Passive investing has expanded rapidly in India's mutual fund business. Investors are moving more towards funds that track market indices such as the Nifty 50 or the Sensex. These generally cost less than actively managed funds. Passive investing is not limited to equities. Through index funds and ETFs, money can also be invested in gold, silver and debt securities.

According to the AMFI-CRISIL Factbook 2026, passive funds' assets rose from Rs 3.09 lakh crore in March 2021 to Rs 13.73 lakh crore in March 2026, more than a fourfold increase. The compound annual growth rate (CAGR) over the five years was 34.7 per cent. Their share in the mutual fund industry's total assets nearly doubled, from 9.8 per cent to 18.6 per cent.

The year-by-year picture was as follows. In March 2022, passive assets stood at Rs 4.99 lakh crore and the industry share at 13.3 per cent. In March 2023, they were Rs 6.75 lakh crore and 17.1 per cent. In March 2024, they were Rs 9.09 lakh crore and 17.0 per cent, and in March 2025, Rs 11.22 lakh crore and 17.1 per cent.

Not all of this growth comes from fresh investment. Assets under management (AUM) also rise and fall with market prices. The more interesting aspect of the trend is how the make-up of passive investing has changed.

In March 2021, ETFs other than gold held 89.2 per cent of passive assets. By March 2026, this had fallen to 65.1 per cent. Index funds moved in the opposite direction. Their share rose from 6.2 per cent to 22.4 per cent. Their assets reached Rs 3.07 lakh crore, and the five-year CAGR was 74.1 per cent.

The approach is also gaining ground among regular investors. According to AMFI, index funds' SIP assets were about Rs 46,000 crore in March 2026, with a five-year CAGR of 72.5 per cent.

Category-wise, passive fund assets in March 2026 were as follows. Other ETFs, covering equity, debt and silver among others, held Rs 8.95 lakh crore, or 65.1 per cent. Index funds held Rs 3.07 lakh crore, or 22.4 per cent, and gold ETFs Rs 1.71 lakh crore, or 12.5 per cent. The total comes to Rs 13.73 lakh crore.

Management costs of passive funds are generally low because they follow a predetermined benchmark and the fund manager does not have to pick stocks separately. Over the long term, even a small difference in costs can affect investment outcomes.

Lower cost, however, does not mean lower risk. When the benchmark falls, the index fund falls too. An ETF concentrated on a single sector carries the risk of money being confined to a few places. Tracking difference, expense ratio and ETF liquidity also need attention.