In a recent research endeavor, Motilal Oswal Asset Management Company (MOAMC) has unveiled a substantial rise in the adoption of passive funds in India’s investment landscape. The study, encompassing feedback from over 2,000 investors nationwide, highlights a remarkable surge in passive funds’ market share from a modest 1.4% of Assets Under Management (AUM) in 2015 to a notable 17% at present.
MOAMC, a prominent player in the financial sector, has significantly contributed to this growth by offering a comprehensive range of passive funds. These offerings amass an impressive ₹17,000 Crores in AUM across 30 Index Funds, Exchange-Traded Funds (ETFs), and Fund of Funds (FoFs).
Key findings of the study underline shifting investor preferences. Notably, 61% of respondents have invested in at least one passive fund, citing low costs, simplicity, and competitive market returns as the driving factors. Furthermore, 53% of participants reported an increased allocation to passive funds over the past year.
A noteworthy revelation is the popularity of Systematic Investment Plans (SIPs), favored by 75% of respondents for disciplined, long-term wealth creation. The study also highlights the growing reliance on social media platforms for investment insights, with 60% of participants turning to these channels. More than 80% of investors expressed an intent to retain their investments for over three years.
The MOAMC study sheds light on the evolving investment landscape, emphasizing the ascent of passive funds and reshaping traditional investment strategies.
Speaking on the study, Navin Agarwal, MD & CEO, Motilal Oswal Asset Management Company Ltd.said, “The demand for passive investing has grown exponentially over the past few years, which reflects in AUM growth of 8.5x in last 5 years at a CAGR of 54%. Our commitment to innovation and education will continue to support the future of passive funds in India.”
Pratik Oswal, Head of Passive Funds, Motilal Oswal Asset Management Company Ltd said, “Passive funds are widely popular in the U.S. and have over 50% market share. We have started seeing similar trends in India over the last few years as well. With a market share of around 17%, we believe that there is ample runway for passive funds ahead. This survey is a first of its kind in India and provides insights into how investors think about passive funds. It also helps shed some light on the thought process behind investment decisions of Indian investors.”
According to the findings of the survey, 61% of investors have invested in at least 1 passive fund, underscoring the fast-growing adoption of passive funds in India. Revealing the reason investors choose to invest in passive funds, the survey findings point out the fact that 57% of respondents prefer these funds due to their low-cost nature as the biggest reason, followed by 56% of respondents who feel that the simplicity of these funds is what pulls them to invest in them, and more than 54% investors do so for the fact that they tend to deliver market returns.
