Passive Funds Attract ₹70,000 Crore Inflows in H1 FY26, Driven by ETF Surge

India’s passive investment segment witnessed remarkable growth in the first half of FY26, drawing net inflows of ₹68,505 crore between April and September 2025, according to data from the Association of Mutual Funds in India (AMFI). The rise was largely powered by Exchange Traded Funds (ETFs), which accounted for nearly 85% of total inflows, signalling investors’ growing inclination towards low-cost, diversified investment products.

ETFs Lead with ₹58,035 Crore Inflows

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Of the total passive inflows, ETFs contributed ₹58,035 crore, underscoring their dominance in the mutual fund market. Within this category, equity ETFs attracted ₹25,960 crore, while gold and silver ETFs recorded strong momentum with inflows of ₹14,175 crore and ₹12,929 crore, respectively.

International ETFs added ₹117 crore, while debt ETFs experienced a slight increase of ₹4,852 crore.  Gold ETFs brought in ₹8,363 crore and silver ETFs ₹5,342 crore in September 2025, which accounted for 72% of the ₹19,056 crore in passive fund inflows for the month.  Amidst global economic uncertainty, investors' increased interest in inflation-hedging assets is reflected in the rise in metal-based ETFs.

Index Funds Display Mixed Performance

With ₹17,632 crore inflows in H1 FY26, equities index funds continued to draw steady investor attention, but debt-oriented index funds' performance was less promising.  While non-TM debt index funds saw a slight outflow of ₹55 crore, Target Maturity Index Funds (TMIFs) saw significant redemptions of ₹8,619 crore.  Analysts blame this on investors' wary attitude towards fixed-income securities in the face of shifting interest rate projections.

Precious Metals and Overseas Exposure Lift AAUM

The average assets under management (AAUM) of passive funds rose 11.75%, increasing from ₹11,55,822 crore in April to ₹12,91,635 crore by September 2025. The growth was led by silver ETFs, which saw a massive 106% jump in AAUM, rising from ₹15,089 crore to ₹31,134 crore. Gold ETFs climbed 35% to ₹81,700 crore, while international ETFs and fund-of-funds (FoFs) expanded between 34% and 45%, highlighting growing appetite for global diversification.

Expanding Product Offerings

As a result of the sector's explosive growth, the total number of passive investment plans rose from 615 to 678 between April and September 2025. With 30 new product launches, stock index funds led the market, followed by equity exchange-traded funds (ETFs) with 22.  This rise demonstrates mutual fund companies' deliberate efforts to expand their passive offerings and satisfy the changing needs of institutional and ordinary clients.

Conclusion

The strong ₹68,505 crore inflow into passive funds during the first half of FY26 marks a clear shift in India’s investment landscape towards ETFs and index-based products. The surge in precious metal ETFs and international funds demonstrates a growing investor appetite for diversification, inflation protection, and global exposure. As product innovation and awareness continue to grow, passive investments are poised to play a larger role in India’s mutual fund ecosystem in the coming years