68% of Indian Retail Investors Now Invest in Passive Funds, finds Motilal Oswal Mutual Fund Survey
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Motilal Oswal Mutual Fund (MOMF) has unveiled the third edition of its Passive Survey 2025. Conducted between August and September 2025, the survey gathered insights from over 3,000 investors and 120+ distributors, including mutual fund distributors, RIAs, and wealth managers across India.
The Assets Under Management (AUM) of the passive industry reached ₹12.2 lakh crore, marking a 6.4-fold surge in six years (36% CAGR) from ₹1.91 lakh crore in 2019. Since March 2023 alone, AUM has expanded 1.7 times (~26% CAGR), highlighting rapid adoption.
The survey reveals that passive funds are gaining mainstream traction in India, with 76% of mutual fund investors now aware of Index Funds or ETFs. 68% have invested in at least one passive fund in 2025, up from ~61% in 2023. Despite this growth, a third of investors remain hesitant, citing preference for active funds or unfamiliarity with passive strategies.
Key factors driving passive fund selection include low costs (54%), diversification (46%), simplicity and transparency (46%), and performance (29%).
Distributors echo this trend—93% understand passive funds, with ~46% possessing deep expertise. About 70% allocate passive funds in client portfolios, and 93% intend to increase passive exposure by at least 5% in FY25-26. Currently, 70% of clients hold fewer than three passive funds, indicating modest portfolio allocations.
While investors prioritize cost, diversification, and transparency, distributors value passive funds for diversification (62%), lower risk (34%), and ease of understanding (28%).
Pratik Oswal, Chief of Passive Business at Motilal Oswal AMC, commented: “Passive investing in India has evolved from niche to mainstream, with rising acceptance of index-based and factor-driven strategies. As awareness grows, passive funds are becoming a vital tool for disciplined, long-term wealth creation.”
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