The Assets under management (AUM) of passive funds (ETF and Index Funds) tracking Nifty indices has crossed a new milestone of ₹5 lakh crore, informed NSE in a press release.
The exchange noted that in the last 5 years, passive funds AUM has increased from ₹80,755 crores as on March 31, 2018, to ₹6,74,783 crores as on March 31, 2023, with an annualized growth rate of 53 percent.
During this period, the number of passive funds available in India has also grown from 90 as on March 31, 2018, to 349 as on March 31, 2023, added NSE.
"The Financial Year 22-23 was a landmark year for the Indian passive funds' industry as it registered record fund inflows of ₹1.55 lakh crores and 121 new passive products were launched during the financial year. The AUM of the passive funds has further increased to ₹7,17,042 crores as on May 31, 2023," the press release stated.
It further informed that the Nifty indices linked passive funds account for about 72 percent of total Equity & Debt passive funds AUM and 75 percent of the total number of Equity & Debt passive funds in India. As of May 31, 2023, there are 251 passive funds tracking 101 unique Nifty indices, added NSE.
Large international fund managers also launch exchange-traded funds (ETFs) linked to Nifty indices which are listed in global markets. Currently, there are 16 ETFs listed outside India with a combined AUM of $1.3 billion, stated the release.
On the back of this milestone, Mukesh Agarwal, CEO, NSE Indices, said, "This is an important milestone and a matter of great pride for us. We would like to extend our heartfelt gratitude to all our stakeholders including the Ministry of Finance (GoI), Ministry of Labour & Employment (GoI), SEBI, EPFO, Asset Management Companies, Investors, Trading members, etc. for their unwavering trust and support. We acknowledge that this accomplishment would not have been possible without the continued patronage and confidence shown by our valued clients. We will continue to work with various stakeholders to launch new and innovative indices to grow the passive funds market further. We strongly believe that passive funds are well suited for retail and institutional investors to invest in capital markets. We will continue with our efforts to promote passive funds.”
What are passive mutual funds?
A passive fund is a mutual fund that comprises of securities in line with a market index, or a market segment. Unlike an active fund, the fund manager does not take a call on what securities to buy and sell.
Consequently, passive funds are cheaper to invest in than active mutual funds, because the latter require fund manager(s) to invest time researching and analysing opportunities to invest in.
