Why share of passives still remains small in India's mutual fund industry

Passive funds account for only 16% of India's mutual fund assets, versus 55% in the US.

Corporate investors hold 73% of India's ₹12.92 trillion in passive assets, with retail at just 8%.

Active large-cap funds underperformed the Nifty 100 TRI in 41% of five-year periods ending 2025; mid-cap funds lagged 69% of the time.

Passive assets grew nearly fivefold from ₹2.71 trillion in 2020 to ₹12.92 trillion in 2025, but share rose modestly from 8.75% to 16.11%.

Lower commissions for passive funds reduce distributor incentives, slowing retail adoption despite fee advantages.