Passively managed mutual funds, including index funds and Exchange-Traded Funds (ETFs), are gaining increasing popularity in India. Over the past five years, the Assets Under Management (AUM) of passive funds have surged by 435 per cent, while active funds’ AUM saw a comparatively modest growth of 148 per cent. The primary factors driving this growth are the consistent underperformance of active funds relative to their benchmarks, the cost efficiency of passive funds, and their simplicity in terms of understanding.