Motilal Oswal Asset Management Company Ltd. Passive Funds Investors Survey 2025 reveals that over two-thirds of mutual fund investors now hold at least one passive fund, while 76% are aware of index funds and ETFs. The trend shows how cost efficiency, simplicity, and long-term strategy are reshaping investing habits in India.
Key Insights:
Cost and Convenience Drive Adoption
-> 54% of investors cite low expense ratios as their primary reason for choosing passive funds.
-> 46% value diversification and simplicity, making passive products a practical tool for long-term wealth building.
Long-Term Strategic Play
-> 85% of passive investors plan to hold funds for 3+ years, reflecting a shift from short-term trading to structured portfolio growth.
-> 72% intend to increase passive allocations this fiscal year.
Rapid Growth Across Assets
-> Passive fund assets surged 6.4x from ₹1.91 lakh crore in 2019 to ₹12.2 lakh crore in 2025, with a 26% CAGR since 2023.
-> Record flows in August 2025 totaled ₹11,437 crore, with ETFs, gold ETFs, and index funds leading the inflows.
ETFs & Smart Beta Strategies on the Rise
-> 65% of passive investors now own at least one ETF, up from 41% in 2023.
-> Interest in factor-based/smart beta funds jumped to 61%, from just 13% two years ago.
Who’s Leading the Charge?
-> Millennials dominate participation, followed by Gen X investors.
-> Distributors are responding, with 7 in 10 including passive funds in client portfolios, and 93% planning to raise allocations by at least 5% in FY26.
Portfolio Composition Trends
-> Broad-based equity indices lead passive holdings: 79% in index funds, 62% in ETFs.
-> Gold, thematic, and international equity are also seeing rising allocations.
-> Investors are combining SIPs with lump-sum investments to balance consistent growth with tactical flexibility.
Passive investing is no longer a niche- it’s emerging as a core strategy for building diversified, cost-efficient, long-term portfolios in India.