India's Passive Fund Boom: Where Index Funds Excel, Active Management Still Key

• Passive funds now constitute 17-19% of India's MF AUM, a significant rise from less than 1% a decade ago.
• Experts Pratik Oswal and Aditya Agarwal highlight simplicity and low cost as key drivers for passive fund growth.
• Passive funds are ideal for large-cap exposure and gold ETFs due to market efficiency and muted active fund outperformance.
• Active management remains crucial for mid-cap, small-cap, and thematic funds where skilled managers can exploit inefficiencies.
• Investors should adopt a balanced approach: use passive funds for core large-cap exposure and active funds selectively.

Why It Matters: Passive funds surge in India, but a balanced approach with active management is key for optimal returns.