India’s passive mutual fund industry has crossed a significant threshold, with Assets Under Management (AUM) reaching ₹10.2 lakh crore as of June 2024, according to the “Where the Money Flows” study by Motilal Oswal Asset Management Company (MOAMC).

This growth has propelled passive funds to capture 17% of the total market share in India’s burgeoning asset management sector.

Overall, the industry’s AUM has grown more than sevenfold in the past decade, rising from ₹8.3 lakh crore in December 2013 to ₹61.2 lakh crore by mid-2024.

Despite this surge in passive funds, active funds still dominate the market with AUM standing at ₹50.9 lakh crore.

The study also highlights notable trends within specific fund categories.

The Infrastructure category led the thematic segment, with active thematic funds attracting net inflows of ₹20,000 crore.

This surge was fueled by investor interest in Infrastructure, Manufacturing, Business Cycle, and PSU funds, each drawing more than ₹2,000 crore in net inflows.

Among passive thematic funds, the PSU category saw the highest net inflows, despite its relatively small AUM.

In the debt fund category, both active and passive funds saw substantial net inflows in the June quarter.

Active Constant Maturity funds led the inflows, followed by Gilt and Corporate Bond funds.

Liquid and Money Market funds dominated the estimated net flows in the debt category, accounting for over 85% of inflows, followed by Overnight funds. Low Duration and Ultra Short funds also saw significant inflows, exceeding ₹10,000 crore.

Multi-Asset funds continued to gain traction, leading the hybrid category with approximately 60% of net inflows, followed by Equity Savings and Balanced Advantage funds.

However, the international category faced net outflows of ₹1,000 crore, largely due to restrictions on new investments caused by the RBI threshold.

Despite this, passively managed international thematic funds saw modest inflows of ₹500 crore.

Prateek Agrawal, MD & CEO of MOAMC said, “The rise of AUM in India’s asset management industry reflects the country’s dynamic and rapidly evolving financial landscape. As more investors enter the market, the industry is poised for sustained growth.”

Pratik Oswal, Chief of Business Passive Funds at MOAMC, added, “The financial markets are constantly evolving, and staying informed about where the money is flowing is essential for making sound investment choices.”