Index business grows as investors flock to passive funds for returns

Index-based products rise to top as active fund managers fail to impress clients.

The business of creating and maintaining a stock market and other indices is growing as interest in passive funds grows.

Passive funds mimic returns of an underlying index. They have become popular as active fund managers who look to provide index-beating returns increasingly fail to deliver. An analysis of index business numbers shows a double-digit growth over the last two years.

The overall business has profits nearing Rs 100 crore in 2020-21 (FY21) compared to less than half that amount three years ago. The National Stock Exchange’s index segment profits grew 17.1 per cent in the 2020-21 financial year to