Passive funds lose charm amid falling returns

Synopsis

There are a couple of reasons for a fall in the passive fund flow. First, the return on active large cap funds have been superior to passive funds over the past 12 months. For instance, ICICI Pru Blue Chip, the biggest large cap fund from ICICI Prudential Asset Management Company, delivered 37.4% return while its largest ETF gained 25.3% during the period.

ET Intelligence group: Investors’ interest in passive products has waned over the past year due to lower returns amid regulatory changes after showing a strong traction in the previous year. The 12-month cumulative flow in the passive funds dropped to a 33-month low of Rs 49,846 crore in March 2024, the data from the Association of Mutual Funds in India (AMFI) showed. The sample includes exchanged traded funds (ETFs) and index funds. The inflow

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