A Structural Shift
Total AUM in index funds and ETFs crossed ₹10 lakh crore in March 2026, according to AMFI data. This is up from ₹6.8 lakh crore a year ago — a 47% jump — and represents a fundamental shift in how Indian retail investors approach equity allocation.
What's Driving It
EPFO's continued ETF buying, increased awareness of total expense ratios, and data showing most actively managed large-cap funds underperforming their benchmarks over 10 years have all contributed. Nifty 50 index funds alone account for ₹3.4 lakh crore in AUM.
What This Means for Active Fund Investors
The evidence from mature markets (US, Europe) suggests passive investing works best in large-cap segments where information is efficient. In India, actively managed mid-cap and small-cap funds still have a stronger case. A blended approach — passive for large-cap core, active for mid/small-cap satellite — continues to be a reasonable strategy.