stock market Despite all the ups and downs, the confidence of mutual fund investors has not wavered. MF investors are continuously investing in mutual fund schemes. Yes, a change is definitely being seen that now investors are investing more wisely than before. They are gathering information about the fund before investing and then investing the money. In recent times, a trend has been seen that mutual fund investors are investing heavily in passive funds including index funds and exchange traded funds. Due to this, the folio i.e. account number of these funds has increased by 37 percent. At the same time, total assets under management have increased by more than 24% to cross Rs 11 lakh crore.
122 schemes launched in 2024
According to data from the Association of Mutual Funds in India (Amfi), mutual fund houses launched a total of 122 new passive fund schemes in 2024. Nippon India Mutual Fund, one of the most prominent players in the fund industry, now has 1.46 crore folios in passive funds. Its AUM stands at Rs 1.65 lakh crore and accounts for a whopping 55% of the ETF’s trading volume. Other fund houses like Kotak Mutual Fund, Axis and Motilal Oswal Mutual Fund have also recorded better growth in passive funds.
What is passive fund?
Passive funds are a type of mutual fund. In this, investments are made in a portfolio that mimics market indices like Nifty and Sensex etc. Passive Fund invests its money according to the benchmark index. Therefore, there is no need of any fund manager to manage this fund. For example, if the benchmark index of a passive fund is Nifty 50, then that fund will invest only in the shares of companies included in Nifty 50. Passive fund money is invested in Sensex 30 and Nifty 50 in proportion to their weight. Manager does not play active role in passive fund
Easy to explain to investors
Passive makes an interesting offering, says Arun Sundaresan, head of ETFs, Nippon India Mutual Fund. Funds provide better exposure to different parts of the market, making them true, true label products. There are lots of unique funds, offering very different portfolios and a variety of risk-return profiles for investors to choose from. Seeing the increasing interest of investors in choosing this category of funds, other mutual fund companies have also launched many passive funds. Passive funds have also attracted investors because they have very low expense ratios. They are also easy for investors to understand, making them an attractive option for both retail and experienced investors.
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