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Motilal Oswal Mutual Fund (MOMF) has released the third edition of its Passive Survey 2025. The survey, conducted in August-September 2025, captures insights through the lens of 3000+ investors and 120+ distributors (including MF distributors, RIAs, and wealth managers) across India.

The passive industry Assets Under Management (‘AUM’) stood at Rs.12.2 lakh Crs, a 6.4-fold increase in six years (36% CAGR), from Rs.1.91 lakh Crs in 2019. In just over two years since March 2023, AUM has grown 1.7 times (~26% CAGR), underscoring the accelerating adoption.

The investor survey findings shows that passive funds are becoming mainstream in India. 76% of surveyed mutual fund investors are aware of Index Funds or ETFs in 2025. 68% investors have invested in at least one passive fund in 2025, up from ~61% adoption in 2023. However, even with this adoption growth, one-third of investors remain outside, citing higher confidence in active funds or unfamiliarity with passive products.

Investors cited low costs (54%), diversification (46%), simplicity and transparency (46%), and performance (29%) as key factors when selecting passive funds.

The distributor survey reflects similar traction with 93% of surveyed distributors understanding passive funds of which ~46% demonstrate deep knowledge and ~70% include them in their clients’ portfolios. Most distributors (93%) plan to further increase passive allocation by at least 5% in FY25-26. At present, 70% of their clients hold fewer than three passive funds, indicating that passive exposure plays a satellite role in portfolios.

When choosing passive funds, investors emphasized (54%), diversification (46%), simplicity and transparency (46%), and performance (29%) when choosing passive funds, distributors added them into their product baskets for diversification (62%), low risk (34%), and ease of understanding (28%).

Commenting on the findings, Pratik Oswal, Chief of Passive Business at Motilal Oswal AMC, said, “In India, passive strategies have experienced significant growth in recent years, moving from being a niche allocation in only a few portfolios to being embraced by a broader investor base. Awareness is no longer limited to broad-based index solutions as investors are increasingly accepting factor-based funds and innovative passive strategies. With growing interest, passive investing is emerging as an important approach for investors seeking a disciplined way to participate in long-term wealth creation.”

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