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India passive fund assets forecast to hit 25 trillion rupees by 2025

India
Assets under management of passive funds in India grew an average 69% a year over the past five years and stood at 3 trillion rupees as of end-March
By Goh Thean Eu   
October 25, 2021

India’s passive fund assets are expected to hit 25 trillion rupees (US$334.5 billion) by 2025, an increase of more than eight-fold from current levels, driven partly by cheaper costs and underperformance of active funds, according to Mumbai-based investment platform Finity.

It says assets under management of passive funds in India grew an average 69% a year over the past five years; as of end-March there were more than 160 passive funds with 3 trillion rupees of combined assets.

"The three factors that are contributing to the rising interest in passive investing in India are the underperformance of active funds, lower costs of passive funds, and regulatory and government policies that encourage investment in passive investing products," Finity says in a statement on October 22.

Finity Business Head Abhilash Joseph notes that passive investing is emerging as an important part of investors’ portfolio.

"With the entry of fintech companies in the asset management industry, the number of passive funds that are being launched every month is at an all-time high which has resulted into healthy competition and innovation in products,” he says in the statement.

Finity, established in 2018, currently has more than 600,000 customers using its investment platform to invest in mutual funds.