PASSIVE FLOW STORY FOR JULY 2024
Most of us have heard of the rise of passive funds and their larger role in overall mutual fund AUM, almost ad nauseam, in the last couple of years. By now, we know what Jack Bogle said about passive investing and how it makes more sense to buy the haystack, rather than look for the needle in the haystack. But, there is the real story in the numbers; and these numbers explain why passive funds are gaining traction in India. Here we look at dedicated passive funds and focus on their flows, folios, and AUM as of the close of July 2024. We also look at the two categories of passive stories in India (Indexed Products and FOFs), and how they have performed across different time frames. But, first let us look at the passive flows in the month of July 2024.
We all know that passive fund saw inflows of ₹14,778 Crore in July 2024. That makes passive funds a strong category in terms of flows and also shows revival in flows into passives. After all, it is only when the active story falters that the passive story picks up. Here are the best worst passive fund categories in July 2024 in terms of net inflows. Equity oriented domestic index funds saw bulk of the passive net inflows at ₹8,311 Crore in July 2024. This was followed by equity oriented domestic ETFs at ₹2,903 Crore and Debt oriented ETFs at ₹2,007 Crore. Among other categories, gold ETFs at ₹1,337 and Silver ETFs at ₹746 Crore; also saw robust inflows. Outflows were not too pronounced; but some of the categories seeing outflows included FOFs investing in active overseas funds, Debt oriented TMIFs and Debt oriented non-TMIFs. Overall, the flows trend has been positive for passive funds.
HOW INDEX FUNDS AND INDEX ETF PERFORMED IN JULY 2024
How did the overall universe of active and passive index funds and ETFs (except FOFs) perform in term of returns on a 1 year basis and since inception. We have considered regular plans data for the rankings. There are 363 index funds and ETFs overall in the mutual fund universe in India, with a combined AUM of ₹10,39,882 Crore. Here the Top-25 funds on returns since launch.
| Passive Fund Scheme Name |
1 Year (%) Returns | Launch (%) Returns | Daily AUM (₹ Crore) |
|
| UTI Nifty 500 Value 50 Index Fund | 78.04 | 75.81 | 469.44 | |
| Motilal Oswal Nifty Microcap 250 Index Fund | 61.11 | 69.11 | 1,340.33 | |
| Kotak Nifty Smallcap 50 Index Fund | 58.23 | 67.97 | 82.84 | |
| HDFC NIFTY Smallcap 250 Index Fund | 50.51 | 61.81 | 277.56 | |
| Motilal Oswal BSE Enhanced Value Index Fund | 77.00 | 60.65 | 766.68 | |
| ICICI Prudential Nifty PSU Bank ETF | 55.02 | 60.09 | 68.86 | |
| Motilal Oswal BSE Enhanced Value ETF | 79.89 | 59.81 | 113.99 | |
| Kotak Nifty 200 Momentum 30 Index Fund | 62.44 | 57.67 | 306.53 | |
| HDFC NIFTY Midcap 150 Index Fund | 47.58 | 56.01 | 207.83 | |
| HDFC NIFTY Smallcap 250 ETF | 52.10 | 54.69 | 440.93 | |
| HDFC NIFTY Midcap 150 ETF | 49.12 | 50.57 | 50.80 | |
| DSP Nifty PSU Bank ETF | 54.71 | 50.21 | 40.99 | |
| ICICI Prudential Nifty Auto Index Fund | 63.25 | 46.31 | 147.78 | |
| Edelweiss Nifty Midcap150 Momentum 50 | 62.67 | 43.76 | 565.92 | |
| HDFC NIFTY200 Momentum 30 ETF | 63.90 | 41.71 | 68.25 | |
| ICICI Prudential Nifty 200 Momentum 30 ETF | 64.09 | 40.69 | 279.55 | |
| Edelweiss Nifty Smallcap 250 Index Fund | 51.29 | 40.50 | 73.97 | |
| Tata Nifty Midcap 150 Momentum 50 Index Fund | 61.13 | 40.37 | 501.06 | |
| SBI Nifty Smallcap 250 Index Fund | 50.76 | 40.27 | 991.94 | |
| UTI BSE Housing Index Fund | 39.08 | 39.75 | 25.69 | |
| Mirae Asset Nifty 100 Low Volatility 30 ETF | 32.96 | 39.10 | 10.90 | |
| Aditya Birla Sun Life Nifty 200 Momentum 30 ETF | 64.39 | 38.96 | 67.65 | |
| HDFC BSE 500 Index Fund | 33.77 | 38.62 | 152.92 | |
| ICICI Prudential Nifty 200 Momentum 30 Index Fund | 62.47 | 38.50 | 399.20 | |
| SBI Midcap 150 Index Fund | 48.00 | 38.04 | 582.39 | |
Data Source: AMFI
The family of passive funds have a total of 363 funds across equity generic index funds, equity sectoral index funds, as well as debt index funds and ETFs. These 363 passive funds manage total AUM of ₹10,39,882 Crore as of August 09, 2024. Over a 1 year period, the average return of these 363 passive fund stands at an impressive 28.06%, despite including equity and debt index funds. If you look at these 363 funds in terms of returns since inception, then the average returns stand at an impressive 17.67% on a CAGR basis. However, volatility in one-year returns has been fairly high due to specific index distortions.
HOW FUND OF FUNDS (FOF) PERFORMED IN JULY 2024
How is the overall universe of active and passive fund of funds (FOFs), both domestic and global, in term of returns on a 1 year basis and since inception. We have considered regular plans in this case. There are 110 fund of funds (FOFs) overall in the mutual fund universe in India, with a combined AUM of ₹1,00,004 Crore. Here the Top-20 fund of funds (FOFs) on returns since launch.
| Passive Fund Scheme Name |
1 Year (%) Returns | Launch (%) Returns | Daily AUM (₹ Crore) |
|
| ABSL Active Debt Multi Manager FOF | 7.53 | 7.34 | 17.76 | |
| ABSL Asset Allocator FOF | 29.26 | 10.71 | 175.22 | |
| ABSL Financial Planning FOF Aggressive Plan | 31.82 | 13.10 | 217.98 | |
| ABSL Financial Planning FOF Conservative Plan | 18.41 | 9.17 | 18.94 | |
| ABSL Financial Planning FOF Moderate Plan | 25.15 | 10.99 | 36.48 | |
| Aditya Birla Sun Life Gold Fund | 16.56 | 6.03 | 351.84 | |
| Aditya Birla Sun Life Multi – Index FOF | 36.07 | 25.26 | 16.09 | |
| Aditya Birla Sun Life NASDAQ 100 FOF | 23.01 | 8.66 | 365.10 | |
| Aditya Birla Sun Life Silver ETF FOF | 12.91 | 10.49 | 139.57 | |
| Axis Equity ETFs FOF | 36.19 | 21.23 | 22.02 | |
| Axis Gold Fund | 16.37 | 5.90 | 513.95 | |
| Axis Nifty AAA Bond Plus SDL Apr-26 50:50 ETF FOF | 7.92 | 5.09 | 292.39 | |
| Axis Silver FOF | 14.57 | 21.00 | 46.75 | |
| Bandhan All Seasons Bond Fund | 7.45 | 7.31 | 121.90 | |
| Bandhan Asset Allocation Aggressive | 25.74 | 10.67 | 18.18 | |
| Bandhan Asset Allocation Conservative | 12.54 | 8.25 | 6.46 | |
| Bandhan Asset Allocation Moderate | 19.47 | 9.68 | 19.57 | |
| Bandhan US Equity FOF | 26.35 | 9.90 | 292.25 | |
| Bandhan US Treasury Bond 0-1 year FOF | 6.61 | 6.38 | 150.85 | |
| BHARAT Bond ETF FOF – April 2032 | 7.98 | 5.86 | 4,420.77 | |
Data Source: AMFI
The family of fund of funds (FOFs) have a total of 110 funds across equity, debt, domestic and international FOFs. These 110 passive fund of funds (FOFs) handle total AUM of ₹1,00,004 Crore as of August 09, 2024. Over a 1 year period, the average return of these 110 fund of funds (FOFs) stands at an impressive 18.41%, since this includes equity and debt index FOFs, as well as domestic and international FOFs. If you look at these 110 FOFs in terms of returns since inception, then the average returns stand at a more subdued 10.98% CAGR, which is still above average.
PASSIVE FUND FOLIO GROWTH: JULY 2024 OVER JULY 2023
There have been concerns that retail has not adapted to passive funds with the same enthusiasm and gusto as they did with active funds. However, the folios growth numbers are quite revealing. We will look at both the parameters; but first we focus on the folio growth. There are 13 categories of passive funds as identified by AMFI, but the “Other domestic ETFs”, category was dropped due to zero folios. The table below compares the folio numbers of the remaining 12 categories of passive funds as of end July 2024 over July 2023. The table below is ranked on the growth percentages. It may be skewed in favour of the small base categories, but that is not exactly a bad problem to have.
| Passive Mutual Fund Schemes (Folios) |
Folios Jul-24 (in Numbers) |
Folios Jul-23 (in Numbers) |
Growth (%) |
| Silver ETF | 3,71,872 | 92,991 | 299.90% |
| Equity oriented Index Funds (Domestic Index Funds) | 92,34,848 | 43,79,428 | 110.87% |
| Other Index Funds | 79,109 | 38,161 | 107.30% |
| Equity oriented ETFs (International ETFs) | 5,08,487 | 3,17,132 | 60.34% |
| Fund of funds investing overseas in Passive Funds | 6,97,547 | 4,91,216 | 42.00% |
| Equity oriented ETFs (Domestic ETFs) | 1,23,88,986 | 99,08,888 | 25.03% |
| Income/Debt Oriented ETFs | 22,20,851 | 18,93,318 | 17.30% |
| Gold ETF | 55,27,649 | 47,74,760 | 15.77% |
| Equity oriented Index Funds (International Index Funds) | 2,54,503 | 2,36,737 | 7.50% |
| Income/Debt Oriented Index Funds (TMIF) | 1,52,435 | 1,44,263 | 5.66% |
| Income/Debt Oriented Index Funds (Other than TMIF) | 14,781 | 15,703 | -5.87% |
| Fund of funds investing overseas in Active Funds | 7,29,739 | 8,82,837 | -17.34% |
| Total of Passive Funds | 3,21,80,807 | 2,31,75,434 | 38.86% |
Data Source: AMFI (TMIF is target maturity index funds)
The above table compares the folios at the end of July 2024 with the folios at the end of July 2023 (12-month growth). Here is what we infer.
- Passive fund folios yoy growth in July 2024 stood at 38.86%; compared to 34.24% in June 2024, and 32.40% in May 2024. That is a lot of investor intensity visible in last 12 months, purely if you go by the folio numbers. The total folios of passive funds stand at 321.81 Lakh folios as of the close of July 2024; compared to 305.01 Lakh folios as of June 2024, 296.43 Lakh folios in May 2024, 287.09 Lakhs folios in April 2024, and 279.63 Lakh folios as of the close of March 2024. The yoy growth is steadily higher.
- Which is the specific category of passive fund that led the growth. The leader was silver ETFs, a recent addition, which saw folios growing 299.9% over July 2023. That is fantastic growth in 12 months, although the base was relatively small.
- The other 3 categories of funds that saw good traction were equity oriented domestic index funds with folio growth of 110.87%, Other Index Funds growing folios at 107.3%, equity oriented international ETFs growing folios at 60.34%, and FOFs investing in overseas passive funds folios growing 42.00% yoy.
- Which were the laggards in this folio growth list? On the downside, the FOFs investing in overseas active funds continued to see a sharp fall in folios by -17.34% while the income oriented index funds (other than TMIFs) saw contraction of -5.87% in July 2024.
As of July 2024, out of the 12 categories of passive funds with active folios, 10 categories saw accretion in folios over July 2023; with 3 of them more than doubling in the last one year, and 8 of these passive categories growing folios in double digits.
PASSIVE FUNDS AUM: JULY 2024 OVER JULY 2023
The table below captures the assets under management (AUM) of the 12 categories of passive funds with active AUM as of the close of July 2024. Unlike folios, AUM is a mix of fresh flows and market cap accretion. It measures heft, beyond just retail intensity.
| Passive Mutual Fund Schemes |
AUM Jul-24 (₹ Crore) |
AUM Jul-23 (₹ Crore) |
Growth (%) |
| Silver ETF | 7,778.72 | 2,030.37 | 283.12% |
| Equity oriented Index Funds (Domestic Index Funds) | 1,39,883.03 | 64,014.62 | 118.52% |
| Gold ETF | 34,455.15 | 23,329.42 | 47.69% |
| Equity oriented ETFs (Domestic ETFs) | 6,54,855.93 | 4,53,792.82 | 44.31% |
| Fund of funds investing overseas in Passive Funds | 8,264.11 | 6,378.28 | 29.57% |
| Equity oriented ETFs (International ETFs) | 11,850.65 | 9,291.91 | 27.54% |
| Equity oriented Index Funds (International Index Funds) | 4,857.19 | 3,841.45 | 26.44% |
| Income/Debt Oriented ETFs | 1,02,815.58 | 88,993.23 | 15.53% |
| Income/Debt Oriented Index Funds (Other than TMIF) | 14,819.94 | 14,305.85 | 3.59% |
| Other Index Funds | 3,520.67 | 3,454.76 | 1.91% |
| Income/Debt Oriented Index Funds (TMIF) | 95,067.66 | 93,685.33 | 1.48% |
| Fund of funds investing overseas in Active Funds | 16,915.52 | 18,025.50 | -6.16% |
| Total of Passive Funds | 10,95,084.15 | 7,81,143.56 | 40.19% |
Data Source: AMFI (TMIF is target maturity index funds)
We have compared AUM of the 12 passive fund categories (with active folios) for July 2024 over July 2023. The share of passive funds in AUM had fallen below 17% in May 2024, but had then bounced back to 17.14% in June 2024. However, the share again fell to 16.86% in July 2024. .Here are key takeaways from the passive AUM data.
- AUM of passive funds grew 40.19% in July 2024 on a yoy basis; compared to 37.84% in June 2024, and 32.86% in May 2024 on a yoy basis. Much of the accretion in the AUM has obviously come from Nifty and Sensex touching all-time highs, and so the AUM growth has been more pronounced in the equity oriented passive categories. After the election uncertainty in May and June, the month of July was impacted to some extent by the mixed interpretation of the budget changes in the capital gains tax.
- Index ETF AUM of domestic ETFs touched ₹6.55 Trillion and it has emerged as the single largest contributor to the overall mutual fund AUM. In fact, the equity index ETF AUM is also the largest class of fund in India in terms of AUM across all categories of mutual funds.
- The leader of the pack in terms of AUM growth in June 2024 over June 2023 was led by silver ETFs, a recent addition, which saw AUMs growing by 283.12% yoy. The other categories of passive funds that saw good traction in the last 12 months were domestic equity index funds at 118.52%, Gold ETFs at 47.69%, equity oriented domestic ETFs at 44.31%, and FOFs in passive overseas ETFs at 29.57%.
- On the downside, fund of funds (FOFs) investing in overseas active funds saw contraction in AUM of -6.16% while all the other categories of passive funds saw accretion in AUM for the month of July 2024. Out of the 12 categories of passive funds with existing folios, 11 categories of passive funds saw AUM accretion while just 1 category saw AUM contraction. Eight of these passive funds grew in double digits, while two of these eight more than doubled AUM on a yoy basis.
The growth in passive AUM has come on the back of index accretion, but also at a time when the market volatility and uncertainty levels have been high. In the last 2 months, there has been a clear indication of passive funds coming back into flavour. Of course, a few swallows do not make a summer.
