‘AUM of passively managed products to grow 8X by 2025 to reach Rs. 25 trillion’: Finity Report


‘AUM of passively managed products to grow 8X by 2025 to reach Rs. 25 trillion’: Finity Report 

·         Finity launches unique and insightful ‘Passive Investing Report 2021’

·         Over the last five years, AUM of Passive investments in India have grown at a CAGR of 69.15% as compared to the overall MF industry AUM growth at a CAGR of 21.15% 

·         As of March 2021, AUM of passive investments has grown 5X in the previous 5 years 

Chennai Finity, India’s leading low-cost investment platform, has announced the launch of its special report on Passive Investing. As per the ‘Passive Investing Report 2021’, it is estimated that the AUM of passive investing will grow 8 times from the current levels of Rs. 3 trillion to Rs. 25 trillion by 2025. 

The report provides a holistic view on the state and growth of passive investing in India and internationally. Passive investments have emerged as one of the promising avenues to grow investors’ money. In the last five years, the Indian passive market took off, with assets growing more than 1200% in absolute terms. The report states, from March 2016, passive assets under management have grown from Rs. 22,409 crore to Rs. 3,10,330 crore in March 2021, at a CAGR of 69%. 

Passive assets have almost doubled in the last 12 months. The three factors that are contributing to the rising interest in passive investing in India are underperformance of active funds; especially in the large cap category, lower costs of passive funds, and regulatory and government policies that encourage investment in passive investing products. The Indian passive investing market has seen several innovative products launched in the last couple of years with around 160 passive schemes being offered currently in India. 

On this occasion, Mr. Abhilash Joseph, Business Head of Finity, said, “We are delighted to launch the ‘Passive Investing Report 2021’ to create awareness amongst the investors on the lesser-known aspects of passive investing.  Passive investing is emerging as an important part of investor portfolios. With the entry of Fintech companies in the asset management industry, the number of passive funds that are being launched every month is at an all-time high which has resulted into healthy competition and innovation in products. We, at Finity, are positive on passive investment products because they are very simple for a common investor to understand and are low cost while giving returns that match the index. We expect that the total AUM in passive assets will more than double over the next two years.”  

As of March 2021, AUM of passive investments as a percentage of overall AUM of mutual fund industry in India was at 10% at the end of March 2021 as compared to 2% at the end of March 2016. This represents a 5X growth in 5 years. Passive funds space is set to grow bigger with growth of Mutual fund industry and piggy backing on India as faster growing economies.

Alongside the report launch, Finity will be hosting ‘GoPassive – Passive Investing Conclave 2021’ where the industry veterans from the BFSI and Fintech sector will be discussing the new trends and investment potential that passive investing have to offer.