Why

Passive

Investing

is growing in India?

Active Investing

Active investing involves investing in direct equity (stocks), equity mutual funds or other market-linked instruments with the objective of generating higher than the benchmark returns. The benchmarks can be the Nifty 50 index or the Nifty 200, depending on the investment.

Passive Investment

Passive investment is a strategy that focuses on replicating the index performance and generating returns equivalent to the index. Exchange Traded Funds (ETF) as a tool, align perfectly with the ideology of passive investmen

Advantages Of Passive Investing

One of the major advantages of passive investing is the low management fees or expense ratio. While an active fund requires a fund manager and a team of analysts who analyse and make buy and sell decisions, the job of a passive fund manager is much easier as he or she only needs to replicate the index in their fund.

AUM Growth

In March 2017, the passive AUM in India stood at Rs 52,368 crore, which stood at Rs 4,99,319 crore in March 2022 – a staggering growth of 57% CAGR. last year passive assets have almost doubled. Currently passive assets are about 13% of the overall assets in India, that number is expected to be nearly 40% in the next 5 years.

Rapid Rise in India

Globally over the past five years, more than 80% of the active funds have underperformed their benchmarks. That, along with higher costs, has pushed the investors towards low-cost passive opportunities like Exchange Traded Funds (ETFs).

Reasons Behind Growth

 Primary reasons for growth in passive investing is that many investors along their investment journey have realised the need to diversify their holding into both alpha generating active investments and passive investments which will have lower risk but deliver returns equal to the benchmark

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