Passive AUM gets a leg up from inflows into index ETFs

16 Apr 2025 , 11:42 AM

PASSIVE FLOW HIGHLIGHTS FOR FEBRUARY 2025

The March 2025 quarter saw a revival in passive flows and the month of March was especially robust for passive fund flows at ₹14,149 Crore. Apart from increasing interest in index funds and index ETFs, the credit for the passive fund flows must also go to Gold ETFs. Net inflows into passive funds in March 2025 was 38.1% higher at ₹14,149 Crore. Of course, some categories of passive fund did a lot better.

Domestic equity index ETFs led the way with inflows of ₹11,808 Crore followed by domestic Index funds at ₹3,461 Crore, and Debt Oriented Index Funds (ex-TMIR) at ₹1,694 Crore. Accretion to gold and silver ETFs were relatively subdued. Among the categories that saw net outflows in March 2025 were Debt Funds (TMIF) and Debt Oriented ETFs. Out of the 11 categories of passive funds with active flows; 5 categories showed positive net flows and 7 saw net outflows.

EQUITY INDEX FUND PERFORMANCE IN MAR-25

The table below ranks equity oriented index funds in India on 3-year returns. We have only considered funds where a 3-year track record is available.

Equity Index Funds Scheme Name	1 Year (%) Returns		2-Year (%) Returns		3-Year (%) Returns
Axis Nifty Midcap 50 Index Fund Direct	0.708	28.020		17.989
MOSL Nifty Midcap 150 Index Fund Direct	-0.689	26.583		16.656
ABSL Nifty Midcap 150 Index Fund Direct	-0.942	26.520		16.566
Nippon Nifty Midcap 150 Index Fund Direct	-0.916	26.309		16.437
Navi Nifty Midcap 150 Index Fund Direct	-0.955	26.213		16.355
ICICI Pru Nifty Midcap 150 Index Fund Direct	-1.025	26.135		16.306
UTI BSE Low Volatility Index Fund Direct	-2.243	17.883		13.691
MOSL BSE Low Volatility Index Fund Direct	-2.311	17.733		13.654
ABSL Nifty Smallcap 50 Index Fund Direct	-2.935	32.041		13.525
Axis Nifty Smallcap 50 Index Fund Direct	-3.426	32.009		13.503

Data Source: AMFI

The equity index funds overall generated average returns of -2.988% over a 1-year period, 19.839% returns CAGR over a 2-year period, and 10.795% CAGR over a 3-year period. The top funds in the index category are largely predominated by small cap and mid-cap index funds, rather than by index funds on generic indices. Some factor funds also find a place in this list.

DEBT INDEX FUND PERFORMANCE IN MAR-25

The table below ranks Debt oriented index funds in India on 3-year returns. We have only considered funds where a 3-year track record is available.

Debt Index Fund Scheme Name	1 Year (%) Returns	2-Year (%) Returns	3-Year (%) Returns
Kotak Nifty SDL Apr 2032 Top 12 Equal Weight Index Fund Direct	10.890	9.601	8.256
BHARAT Bond ETF FOF – April 2032 Direct	10.537	9.246	7.895
BHARAT Bond FOF April 2031 Direct Growth	9.971	8.957	7.660
BHARAT Bond FOF April 2030 Direct Growth	9.397	8.651	7.583
DSP Nifty SDL Plus G-Sec Jun 2028 30:70 Index Fund Direct	9.335	8.158	7.260
HSBC CRISIL IBX 50:50 Gilt Plus SDL Apr 2028 Index Fund Direct	9.319	8.119	7.232
Bandhan CRISIL IBX Gilt April 2028 Index Direct	9.253	8.062	7.219
Tata Nifty SDL Plus AAA PSU Bond Dec 2027 60: 40 Index FD	8.913	7.847	7.029
Mirae Asset Nifty SDL Jun 2027 Index Fund Direct	8.856	7.859	6.867
ICICI Prudential Nifty SDL Sep 2027 Index Fund Direct	8.945	7.915	6.820

Data Source: AMFI

The debt index funds overall generated average returns of 9.220% over a 1-year period, 8.115% returns CAGR over a 2-year period, and 6.709% CAGR over a 3-year period. The top funds in the index category are largely predominated by longer tenure bond funds, that have gained meaningfully from the fall in bond yields. The debt fund performed has been the strongest in the last one year, which is not suprising.

PASSIVE FUND FOLIO GROWTH: MARCH 2025 OVER MARCH 2024

We see some good tidings from the folio growth numbers of passive funds in March 2025, despite the market stress.

Passive Mutual Fund Schemes (Folios)	Folios Mar-25 (in Numbers)	Folios Mar-24 (in Numbers)	Growth (%)
Silver ETF	6,85,037	1,99,276	243.76%
Equity oriented ETFs (International)	8,48,512	4,07,895	108.02%
Equity oriented Index Funds (Domestic)	1,25,51,345	71,07,136	76.60%
Equity oriented ETFs (Domestic)	1,60,66,279	1,10,93,896	44.82%
Other Index Funds	97,570	68,920	41.57%
Debt Oriented Index Funds (Ex-TMIF)	21,358	15,162	40.87%
Gold ETF	69,69,522	50,60,791	37.72%
Debt Oriented ETFs	24,30,303	20,66,858	17.58%
Debt Oriented Index Funds (TMIF)	1,72,010	1,51,292	13.69%
Equity oriented Index Funds (International)	2,44,426	2,34,036	4.44%
FOF investing overseas in Active Funds	7,70,844	7,71,413	-0.07%
FOF investing overseas in Passive Funds	6,15,215	7,85,875	-21.72%
Total of Passive Funds	4,14,72,421	2,79,62,550	48.31%

Data Source: AMFI (TMIF is target maturity index funds)

Here are some key inferences from the yoy growth in passive folios.

• Passive fund folios yoy growth in March 2025 stood at 48.31%; compared to50.15% in February, 50.92% in January, 52.41% in December, and 52.42% in November 2024. The recent tapering is more due to a spike in SIP closure ratio. Total folios of passive funds stood at 414.72 Lakhs as of March 2025; compared with 409.23 Lakhs in February, 398.62 Lakhs in January, and 389.19 Lakhs in December 2024; hinting at slowing growth.
• What about the leaders? Again, silver ETFs led folio growth at 243.76%, followed by equity oriented ETFs (International) at 108.02% and equity oriented Domestic Index Funds at 76.60%. A total of 10 out of 12 categories saw folio expansion, with FOFs investing in overseas active funds and FOFs in overseas passive funds contracting.

Folio growth may have fallen below 50% after a long time, but that is understandable amidst such global turmoil.

PASSIVE FUNDS AUM: MARCH 2025 OVER MARCH 2024

We have seen some pressure on AUM growth of passive funds in recent months; and that appears to have continued in March 2025 also.

Passive Mutual Fund Schemes	AUM Mar-25 (₹ Crore)	AUM Mar-24 (₹ Crore)	Growth (%)
Silver ETF	15,339.26	4,641.66	230.47%
Gold ETF	58,887.99	31,223.69	88.60%
Equity oriented Index Funds (Domestic)	1,64,082.69	98,014.57	67.41%
Equity oriented ETFs (Domestic)	6,54,406.05	5,52,142.70	18.52%
Equity oriented Index Funds (International)	5,048.72	4,439.37	13.73%
Equity oriented ETFs (International)	12,483.96	11,045.73	13.02%
Other Index Funds	3,568.59	3,329.83	7.17%
Debt Oriented Index Funds (Ex-TMIF)	15,338.71	14,770.09	3.85%
Debt Oriented Index Funds (TMIF)	95,358.43	93,103.62	2.42%
Debt Oriented ETFs	97,400.91	96,170.01	1.28%
FOF investing overseas in Active Funds	17,317.59	17,485.01	-0.96%
FOF investing overseas in Passive Funds	7,713.23	8,228.36	-6.26%
Total of Passive Funds	11,46,946.12	9,34,594.63	22.72%

Data Source: AMFI (TMIF is target maturity index funds)

Here are some key inferences we can draw from the above table.

• Passive fund folios yoy growth in March 2025 improved to 22.72%; compared to 18.78% in February, 26.63% in January, 27.18% in December, and 37.3% in November 2024. The AUM growth of passive funds may be better than last month due to year-end inflows, but the growth is still much lower than the long term average.
• What about leaders and laggards? Again, Silver ETFs led the growth at 230.5%, followed by Gold ETFs at 88.6%, and equity oriented domestic index funds at 67.4%. A total of 10 out of 12 categories saw AUM expansion, with the two FOFs investing in global active and passive funds, at the bottom of the list.

While the AUM growth has been hit by the weakness in the market, the positive takeaway is that the folio growth continues to be robust.