Three-fold growth in index fund AUM in 2022, ETF assets cross Rs 5 trn

Index fund growth led by debt schemes, with fund houses launching target maturity funds this year

Passive funds defied market slowdown and poor debt fund outlook to rise briskly in 2022. The assets under management (AUM) of passive funds increased 41 per cent to Rs 6.5 trillion by November, as the overall AUM of the industry grew just 7 per cent in the eleven-month period.

Money managed by index funds has grown almost three-fold during the period to Rs 1.2 trillion from Rs 45,400 crore at the end of 2021. Most of the growth has come from the debt side as fund houses launched an array of target maturity of funds in the second half of 2022. Data from the Association of Mutual Funds in India (Amfi) shows that target maturity funds garnered a net inflow of Rs 40,000 crore in this financial year (April to November 2022).

The AUM of non-gold Exchange Traded Funds (ETFs) has risen 31 per cent in 2022 (till November-end) to touch Rs 5 trillion. This financial year, equity ETFs have received net inflows of Rs 35,200 crore and debt ETFs have garnered a net inflow of Rs 16,800 crore, shows Amfi data. The AUM of gold ETFs rose to Rs 20,830 crore from Rs 18,400 crore during the period.

Passive schemes have gained traction in the past two years owing to their low cost structure and ability to deliver returns in line with the performance of their benchmarks at a time when fund managers of some categories of active funds are finding it difficult to outperform the benchmark.