NSE launches India’s first website for passive funds

The National Stock Exchange (NSE) has launched India’s first website for passive funds to provide a comprehensive platform for retail investors and empower them to easily access information and understand the Indian passive funds industry.India’s first website for passive funds provides in-depth information on aggregate industry data, fund-wise data, screeners for selecting funds based on various parameters such as underlying index, AUM, tracking error, tracking difference, trading volume, TER, comparison of funds etc.

The website can be accessed on (www.indiapassivefunds.com). It will offer comprehensive information on passive funds such as ETFs and index funds. The objective behind this is to provide investors with all the necessary information and insights to review and evaluate the passive fund industry and its various products effectively.

According to the website, Nifty indices served as the benchmark index for 145 ETFs listed in India and 16 ETFs listed abroad as of March 31, 2024. First passive fund in India was launched in 1999. However, actual growth started from August 2015.

The website also shows that the total AUM of passive funds is Rs 10.22 lakh crore as of June 2024, which comprises Rs 7.79 lakh crore AUM of ETF and Rs 2.43 lakh crore AUM of index fund. There are around 430 passive mutual funds. The number of folios for the ETF are 1.88 crore whereas for index funds these are 75.76 lakh as of March 2024.

Over the last eight years, the investment landscape has seen a significant shift towards passive funds, driven by their cost-effectiveness, transparency, and ability to consistently match market performance.Equity mutual fund schemes AUM share rapidly rose from about 27% in March 2013 to 62% in March 2024. ETF and FoF share has also risen from about 2% to 13% in the same period, according to a report by NSE on Indian Capital Markets.The report also highlighted that, predominantly concentrated with institutional investors, passive mutual fund schemes saw an increase in AUM share from 7% in March 2020 to 17% in March 2024.

MF Lite regulations are currently being developed by Sebi to reduce compliance requirements in the passive fund ecosystem. By doing this Sebi aims to boost product innovation and flexibility for market participants.

This effort is a part of Sebi’s segmented approach to regulation. Passive funds, which have no fund manager risk as they replicate underlying index, have fewer compliance and disclosure requirements compared to traditional/active funds, where investment decisions are at the discretion of the fund manager, said the report.