Passive mutual fund schemes have attracted huge investor interest on the back of the sharp fall in key indices in the last few months.

New folios opened in the passive fund category, which includes index funds and exchange-traded funds, grew 37 per cent last year, while assets under management increased 24 per cent to over ₹11 lakh crore in 2024, as per the latest Association of Mutual Funds in India (AMFI) data.

Riding on huge investor interest, mutual funds launched 122 new passive fund schemes in the year.

The market leader in the space, Nippon India Mutual Fund, has an AUM of ₹1.65 lakh crore across 1.46 crore folios in passive funds and accounts for 55 per cent of the trading volume in ETFs.

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Other fund houses such as Kotak MF, Axis MF, Birla MF, and Motilal Oswal MF have also reported healthy growth in passive fund assets with the launch of new fund offers.

Arun Sunderasan, Head of ETFs at Nippon India MF, said the passive space makes for an interesting proposition as it offers pure exposure to various parts of the market, making them a perfect example of true-to-label products.

“There are a lot of unique funds, offering very different portfolios and a variety of risk-return profiles for investors to choose,” he added.

Nippon India MF, which launched 8 new funds in the passive category last year, has 24 ETFs and 21 index funds.

Other AMCs have also launched a slew of passive funds given the growing investor interest.

Passive funds have also caught the fancy of investors, as they have a lower cost structure and are easy to understand, making them an attractive option for both retail and seasoned investors.