Passive funds are growing: How you can benefit by investing in them

Demand and supply factors have led to the preference for passive funds

The assets under management (AUM) of passive funds have grown to Rs 10.2 trillion, while active funds stand at Rs 50.9 trillion as of June 2024, according to a study titled Where the Money Flows by Motilal Oswal Asset Management Company. Passive funds now constitute 17 per cent of the industry’s total AUM.

Key drivers of growth

Experts highlight that both demand and supply factors are behind the increasing popularity of passive funds. The Employees’ Provident Fund Organisation (EPFO) is a significant contributor to the growth of passive AUM, but individual investors are also increasingly favouring these funds.

On the