Despite high adoption, one-third of investors remain outside, citing higher confidence in active funds or unfamiliarity with passive products
The Assets Under Management of passive funds has grown 6.4 times in last six years to ₹12.2 lakh crore from ₹1.91 lakh crore in 2019. Since March 2023 alone, AUM has grown 1.7 times underscoring the accelerating adoption, according to the third edition of its Passive Survey 2025 by Motilal Oswal MF released on Monday.
The survey captures insights through the lens of over 3,000 investors and over 120 distributors (including MF distributors, RIAs and wealth managers) across India.
Despite high adoption, one-third of investors remain outside, citing higher confidence in active funds or unfamiliarity with passive products.
Investors cited low costs (54 per cent), diversification (46 per cent), simplicity and transparency (46 per cent) and performance (29 per cent) as key factors when selecting passive funds.
The distributor survey reflects similar traction with 93 per cent of surveyed distributors understanding passive funds of which 46 per cent demonstrate deep knowledge and 70 per cent include them in their clients’ portfolios.
Passive push
Most distributors (93 per cent) plan to further increase passive allocation by at least 5 per cent in this fiscal. At present, 70 per cent of their clients hold fewer than three passive funds, indicating that passive exposure plays a satellite role in portfolios.
Pratik Oswal, Chief of Passive Business, Motilal Oswal AMC said awareness is no longer limited to broad-based index solutions as investors are increasingly accepting factor-based funds and innovative passive strategies.
With growing interest, passive investing is emerging as an important approach for investors seeking a disciplined way to participate in long-term wealth creation, he said.
Published on October 6, 2025