Passive investing in India is rapidly shedding its image as a niche allocation and is emerging as a core pillar of long-term portfolios, driven by strong retail participation and rising institutional interest. Assets under management (AUM) in passive funds have surged more than sevenfold over the past six years, reflecting a decisive shift in investor behaviour, according to Angel One Asset Management Company.
“Looking ahead to 2026, passive investing is no longer a side bet, it is fast becoming the backbone of long-term portfolios,” said Hemen Bhatia, Executive Director and Chief Executive Officer of Angel One AMC. He noted that passive AUM in India has climbed from ₹1.9 lakh crore in 2019 to ₹13.7 lakh crore in 2025, while the number of folios has expanded nearly twentyfold to about 4.7 crore.
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Industry experts say this sharp acceleration underlines a growing preference for low-cost, transparent and rules-based investment strategies among Indian investors. Passive products such as index funds and exchange-traded funds (ETFs) are increasingly being seen as default choices across geographies and investor profiles, particularly among first-time and long-term investors.
Bhatia said the momentum is expected to continue through 2026, supported by deeper retail penetration, wider distribution, and increasing awareness about cost efficiency and consistency of returns over long horizons. Institutional participation, including from provident funds and insurers, is also providing a steady tailwind to the segment.
Global trends further reinforce this shift. In the United States, passive funds now account for more than half of mutual fund assets. According to data from the Investment Company Institute (ICI), passive AUM in the US, including ETFs and index funds, rose from about $13 trillion in 2019 to over $20 trillion by 2025.
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In comparison, India’s passive share currently stands at around 17%, indicating significant headroom for growth. “With India still at a relatively early stage of adoption, the journey into 2026 and beyond suggests a long and compelling growth runway ahead,” Bhatia said.
Based on current market trends, as financialisation of household savings gathers pace and investors become more outcome-oriented, passive investing is likely to play an increasingly central role in portfolio construction in the years to come.
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