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This edition set out to understand how Indian investors were engaging with passive funds in 2025. The survey reached over 3,000 mutual fund investors and 120 distributors across the country between August and September 2025 with an objective to capture awareness, adoption, motivations, and the challenges shaping the future of passive fund investing.
Key Highlights:
Among investors, awareness has expanded considerably—76% are familiar with passive funds, and 68% of them have already invested. Affordability and diversification emerged as leading drivers, while 85% of respondents indicated they intend to hold these funds for more than three years, reflecting a long-term orientation. Allocation trends are also encouraging: 55% increased exposure in the last year and 72% plan to add more in FY25–26.
From the distributors’ perspective, passive products are gaining importance in client portfolios. Nearly 70% of distributors now include passive funds in their offerings, with diversification benefits being the most frequently cited reason. Millennials stand out as the most engaged segment, with 54% of distributors observing stronger demand from this age group.
Growing Interest in ETFs and Smart Beta
The survey revealed a sharp rise in ETF adoption, moving from 41% in 2023 to 65% in 2025. Low costs, liquidity, and ease of access were cited as key attractions. Smart Beta strategies too are gathering pace, with 61% of passive investors having explored them—particularly momentum, quality, and value factors.
The turning point for passive fund investing
These findings point toward a structural shift in the Indian mutual fund landscape. With growing awareness, rising allocations, distributor conviction, and diversification into ETFs and Smart Beta, passive funds are steadily becoming a core element of investor portfolios—signalling their movement into the mainstream.
Disclaimer: Investors: This document has been prepared using internal data, publicly available information, and other sources believed to be reliable. It is intended for general information purposes only and does not purport to be a complete disclosure of all material facts. The illustrations and graphs used are conceptual and for explanatory purposes only.The information presented should not be construed as investment advice or as a basis for developing or implementing any investment strategy. Opinions, estimates, and data reflect views as of the date of this report and are subject to change without notice. No representation or warranty, express or implied, is made regarding accuracy, completeness, or reliability, and no liability shall be accepted for any losses or damages arising from the use of this information.The statements contained herein may include statements of future expectations and other forward-looking statements that are based on our current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. The recipient should exercise due caution and/ or seek professional advice before making any decision or entering into any financial obligation based on information, statement or opinion which is expressed herein. This report may contain forward-looking statements, which involve known and unknown risks and uncertainties. Actual results may differ materially from those expressed or implied. Readers are advised to exercise discretion and/or seek professional advice before making any investment decisions.Passive funds are designed to track an index and may underperform in certain market conditions. Past performance does not guarantee future results. SIP-related figures (amount, tenure, rate of return, etc.) are illustrative and not indicative of future outcomes.Readers shall be fully responsible/liable for any decision taken on the basis of this article.
Distributor: This report is based on survey responses from distributors (including mutual fund distributors, RIAs, and wealth managers) and publicly available information. The findings represent reported views and practices as of 2025 and are intended for informational purposes only. They should not be construed as investment advice or a recommendation to invest in any product or strategy. Past performance may or may not be sustained in the future. The data, graphs, and illustrations used in this document are for explanatory purposes only and may not be adequate for developing or implementing an investment strategy. Investors should rely on the relevant scheme-related documents and consult their financial advisor before making investment decisions.The report does not guarantee accuracy or completeness of the information and disclaims any liability for losses arising from the use of this material.
