Passive funds set for boost as Sebi eases market making, NFO and ETF rules

Industry players expect assets to double in five years

The passive fund industry has received a major shot in the arm from the Securities and Exchange Board of India (Sebi), which industry players say, could help double assets under management (AUM) in less than five years.

The market regulator has relaxed several rules around market making, launch of new fund offerings (NFOs) and promotion of debt exchange traded funds (ETFs) through a circular titled ‘development of passive funds.’

At present, passive schemes, which include both ETFs and index funds, have an AUM of Rs 5.27 trillion—less than 15 per cent of the total AUM of the mutual