The assets under management (AUM) of all the exchange-traded funds (ETFs) and index funds that track the Nifty 50 index in India have crossed Rs. 2 lakh crore. The Nifty 50 index-linked passive funds account for 40 per cent of total passive funds AUMs in India.
The popularity of passive funds has grown consistently over the last 20 years since they began in December 2001, when the first ETF was launched on the Nifty 50. Currently, there are 17 ETFs and 19 index funds in India and seven ETFs trade in the international markets tracking the Nifty 50.
During the last five years, passive funds’ AUM has increased from Rs 52,368 crore (March 31, 2017) to Rs 4,99,319 crore (March 31, 2022). This means an annualised growth rate of about 57 per cent. During this period, the number of passive funds available in India has also grown from 84 to 228.
FY22 saw record fund inflows of Rs 1.28 lakh crore over the year. In addition, 82 new passive products (ETFs and index funds) were launched in the year.
Moreover, there has been higher retail participation through the year with more than 10 million new folios created in FY22, representing 60 per cent of the 17.3 million outstanding folios as on March 31, 2022.
The AUM of passive funds that track the Nifty indices account for about 74 per cent market share of equity and debt passive funds AUM in India.
Vikram Limaye, managing director and CEO, NSE, said passive funds are well suited for retail and institutional investors. He added that this milestone has been achieved due to the culmination of efforts by all stakeholders, including Ministry of Finance, Ministry of Labour and Employment, Securities and Exchange Board of India, Employees’ Provident Fund Organisation, asset management companies, investors, trading members, etc.
Mukesh Agarwal, CEO, NSE Indices, said they had launched 34 new indices that will provide more choice to investors to invest in ETFs and index funds linked to these indices. “Adoption of passive funds in India is increasing on a continuous basis as evident from the large number of new folios created in the last couple of years. Inflows into the passive funds have been strong in the last financial year and trading volumes of ETFs are also rising steadily,” he added.