Passive Investing in India, From Marginal to Mainstream

Five years ago, suggesting passive investing to a retail Mutual Fund investor in India would yield sceptical responses. Today, the numbers speak louder than any pitch.[EasyDNNnews:PaidContentStart]

India's passive mutual fund industry closed FY26 with assets under management of ₹14.63 lakh crore, accounting for 18 per cent of the entire mutual fund industry. This is higher than 17 per cent just a year earlier. The acceleration is undeniable: passive assets surged from ₹11.13 lakh crore in FY25 to ₹14.63 lakh crore, a growth trajectory that reflects genuine investor embrace.

But the most striking evidence lies in adoption metrics. The number of passive schemes expanded 21 per cent, from 614 to 740 schemes, while investor folios exploded 40 per cent, rising from 4.1 crore to 5.7 crore accounts. This is not institutional money driving growth; these numbers reveal retail India awakening to passive investing's power.

The transition of passive mutual funds from the investment fringes to the mainstream represents a watershed moment for Indian mutual fund investors. What was once dismissed as a strategy for only the sophisticated few has become the choice of discerning savers seeking simplicity, transparency, and superior long-term outcomes.

Investors now understand, why surrender 1.5-2 per cent annually to active managers when Index Funds deliver market returns at 0.1-0.5 per cent? Over decades, this mathematics compounds decisively.

Yet mainstream adoption does not signal active management's obsolescence, it reflects market maturity. Sophisticated investors now employ balanced approaches: passive core holdings supplemented by active positions in specialised segments.

I celebrate this democratization true to our magazine mission. It promotes financial discipline, reduces emotional decisions, and creates generational wealth through patient, systematic investing.

The question is not whether passive investing has gone mainstream. These numbers confirm it has. The question now is: are you ready to join the movement?

Shashikant Singh
Executive Editor

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