Passive Mutual Fund Folios Outpace Active Equity for the First Time

In September, passive mutual fund (MF) schemes added more new accounts than active equity funds for the first time. The change was mainly due to a surge in gold and silver exchange-traded funds (ETFs) after a sharp rise in precious metal prices.

Jump into Passive Fund Accounts

Passive schemes, which include index funds and ETFs, saw about 1.2 million new folios in September. When fund-of-fund (FoF) schemes were added, total new accounts reached 2.1 million. In comparison, active equity funds recorded 1.4 million new folios during the same month.

Gold and Silver ETFs Lead the Increase

Most of the rise in passive folios came from gold and silver ETFs. Together, these funds added around 9.9 million new accounts in September as investors moved towards commodity-based options. Data for gold and silver FoFs has not yet been released, but is also expected to show growth.

Record Inflows in Metal-Backed ETFs

The demand for gold and silver ETFs led to record inflows. Gold ETFs received ₹8,151 crore in September, compared to ₹2,190 crore in August. Silver ETFs saw inflows rise to ₹5,342 crore, nearly three times higher than the previous month. The combined assets under management (AUM) of gold and silver ETFs crossed ₹1 trillion during the month.

Shift in Folio Composition

Active equity schemes have traditionally dominated the mutual fund space in India. They currently hold about 17.5 million active folios, accounting for roughly 70% of the total 25.2 million MF accounts. However, the September data indicate a gradual change in investor allocation between active and passive options.

Read More: ICICI Prudential, SBI and HDFC Mutual Fund Cross ₹5 Lakh Crore in Regular AUM!

Conclusion

The latest figures show a clear shift in investor activity, with passive mutual fund folios led by metal-based ETFs growing faster than active equity for the first time. The change points to a broader diversification in how investors are approaching mutual fund participation.

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