Sachin Bansal-backed Navi Mutual Fund (MF) on Friday filed offer documents for four passive funds with market regulator Securities and Exchange Board of India (Sebi). Among the latest are schemes that will invest in new driving technologies, Chinese equities and companies focused on domestic manufacturing.
During the past two months, the fund house has filed around 14 schemes all in the passive investment segment. In August, Navi MF had filed seven offer documents with Sebi in a single day.
Passive funds aim to replicate the performance of a particular index or a basket of securities. While active mutual funds have a professional investment team who try to outperform the index benchmark by picking stocks at their own discretion.
Passive funds tend to be more tax-efficient and have a lower expense ratio compared to active funds.
In July, the fund house had launched Navi Nifty 50 Index Fund with an expense ratio of 0.06 per cent lowest in the index schemes category.
The demand of passive funds has seen a sharp surge in the last few years as performance of largecap equity funds came down. The data from Value Research shows that out of 10 ten best performers in the last one year, eight schemes are passive in nature. On an average largecap funds have given returns of 53.7 per cent in the last one year.
Schemes having index funds, exchange traded funds (ETFs) and fund of funds investing overseas have seen huge rise in their assets. The data from Association of Mutual Funds in India (Amfi) shows that such schemes had net assets under management (AUM) of Rs 1.65 trillion as on March 2020 which increased to Rs 3.21 trillion in March 2021.
As on August end such schemes had a net AUM of Rs 4.12 trillion. In the last one year many of the first-time investors have started investing in MFs through passive schemes, says the market participants.