Archive · 19 Nov 2025
India's Mutual Fund Market Shifts Towards Passives; Flexi-Cap Funds Dominate
India's mutual fund market is changing.
More people are investing in passive funds like index funds and ETFs, which are cheaper and easier to understand.
These funds have become very popular with high-net-worth individuals and big companies.
At the same time, flexi-cap funds, which can invest in companies of any size, are attracting a lot of money.
These funds have shown they can protect investors' money during market crashes and provide good returns in the long run.
Experts say investors should choose flexi-cap funds based on their consistent performance and the experience of the fund manager.
Index fund folios rose 13 times in four years, driven by HNIs and corporate treasuries
Passive funds' share of total AUM climbed to 17.1% by Sep 2025, up from 7% in FY20
Flexi-cap funds topped inflow charts for the third consecutive month in Oct 2025
Parag Parikh Flexi Cap outperformed peers in market downturns, protecting investor capital
Investors favor flexi-cap funds for their adaptability across market cycles and long-term growth potential
- Who
- High-net-worth individuals (HNIs), corporate treasuries, and retail investors
- What
- Shift towards passive funds and flexi-cap funds
- When
- Over the past four years, with a significant increase in FY25 and Oct 2025
- Where
- India's mutual fund market
- Why
- To access low-cost, benchmark-linked funds and adaptable investment strategies
Passive Investors
Active Investors
Cost
Passive Investors
Lower expense ratios and fees
Active Investors
Potentially higher fees for active management
Performance
Passive Investors
Historically tracked benchmarks closely
Active Investors
Potential for outperformance, but no guarantees
Flexibility
Passive Investors
Less flexibility in portfolio management
Active Investors
More flexibility to adapt to market conditions
- Passive Funds' Share of Total AUM
- 17.1% (Sep 2025), up from 7% (FY20)
- Annual Growth Rate of ETFs (Sep 2021-Sep 2025)
- 28%
- Annual Growth Rate of Index Funds (Sep 2021-Sep 2025)
- 81%
- Net Inflows to Passive Funds in FY25 (YoY)
- 118%
- Top Performing Flexi-Cap Fund in Market Downturns
- Parag Parikh Flexi Cap
Sources
Top Flexi Cap Funds: Jio BlackRock vs Parag Parikh vs HDFC MF – NAV, AUM, Portfolio and Expense Ratio Explained
Which sectors could drive the next market rally? ICICI Prudential AMC’s Rajat Chandak explains
Flexi cap funds top inflow charts again in 3 months; Parag Parikh Flexi Cap outperforms peers in market downturns