It further estimated that passive assets would constitute 37 per cent of the total assets in the mutual fund industry by 2025, up from 10 per cent as of March 2021.
Currently, the 45-player mutual fund industry manages assets worth over Rs 36 lakh crore.
Passive investing has emerged as a promising way to raise investors’ money, the report said.
passive investment Broadly speaking, it is a buy-and-hold investment strategy where the investor invests in a basket of securities defined by a defined method based on an underlying index.
a passive Investment The strategy does not require the investor to actively buy and sell. There are two main instruments for passive investing – index funds and exchange-traded funds (ETFs).
In the last five years, the Indian passive market has taken off, with assets growing more than 1,200 per cent in absolute terms, said Finity’s ‘GoPassive – Passive Investing Report 2021’.
Since March 2016, the idle assets under management have increased from Rs 22,409 crore in March 2021 to Rs 3,10,330 crore at a CAGR of 69 per cent.
In addition, inactive assets have almost doubled in the last 12 months.
According to the report, three factors contributing to the growing interest in passive investing are the poor performance of active funds, especially in the large cap category; lowest rates; and regulatory and government policies that encourage investment in passive investment products.
The passive investment market has witnessed the launch of several innovative products over the years, with around 160 passive schemes currently being offered.
“Passive investing is emerging as a significant part of the investor portfolio. With the entry of fintech companies into the asset management industry, a number of idle fund The launches that are being launched every month are at an all-time high, resulting in healthy competition and innovation in products,” said Abhilash Joseph, Business Head, Finity.
“We expect the total AUM in inactive assets to more than double in the next two years,” he added.
As of March 2021, the AUM of passive investment as a percentage of the total asset base of the mutual fund industry in India was 10 per cent, as against 2 per cent at the end of March 2016. five years.
“The passive fund space is poised to grow bigger with the growth of the mutual fund industry and the piggy bank on India as one of the fastest growing economies,” the report noted.