Passive flows taper in June 2025, but equity MTM offers gains

15 Jul 2025 , 03:29 PM

PASSIVE FLOW HIGHLIGHTS FOR JUNE 2025

After a revival in passive flows in March and April; passive flows disappointed in May 2025 at just ₹5,526 Crore. However, June 2025 passive flows were still lower at ₹3,997 Crore. The action in the month was dominated by inflows into domestic equity index funds, Gold ETFs, and Silver ETFs. Debt based TMIFs, Debt based non-TMIF funds, Domestic Equity ETFs, and domestic debt ETFs saw net outflows in June 2025.

Domestic equity oriented ETFs led the way with inflows of ₹2,523 Crore; followed by Gold ETFs at ₹2,081 Crore, and Silver ETFs and ₹2,005 Crore. Precious metals seems to be the passive flavour of the season. Out of the 12 categories of passive funds with flows; 4 categories showed positive net flows and 8 categories saw net outflows.

HOW EQUITY INDEX FUNDS PERFORMED IN JUNE 2025

The table below ranks equity oriented index funds (direct) in India on 5-year returns. We have only considered funds where a 5-year track record is available.

Equity Index Funds Scheme Name	1 Year (%) Returns	3Year (%) Returns	5-Year (%) Returns
Motilal Oswal Nifty Smallcap 250 Index Fund	0.29	28.71	33.04
Motilal Oswal Nifty Midcap 150 Index Fund	3.17	28.30	30.59
DSP Nifty 50 Equal Weight Index Fund	4.96	20.99	24.91
Sundaram Nifty 100 Equal Weight Fund	0.35	20.62	22.57
Motilal Oswal Nifty 500 Index Fund (MOFNIFTY500)	3.42	20.14	22.44
DSP Nifty Next 50 Index Fund	-6.22	21.82	21.61
UTI Nifty Next 50 Index Fund	-6.07	21.82	21.60
ICICI Prudential Nifty Next 50 Index Fund	-6.43	21.66	21.47
LIC MF Nifty Next 50 Index Fund	-6.07	21.76	21.41
Motilal Oswal Nifty Next 50 Index Fund	-6.06	21.89	21.33

Data Source: Morningstar India

There are a total of 33 equity-oriented index funds with a track record of 5 years and above. These funds overall generated average returns of 3.46% over 1-year, 19.08% CAGR over 3-years, and 21.12% CAGR over 5-years. The top funds in the index category are predominated by mid-cap, small cap, and equal weight indices.

HOW DEBT INDEX FUNDS PERFORMED IN JUNE 2025

The table below ranks Debt oriented index funds (direct) in India on 1-year returns.

Debt Index Fund Scheme Name	1 Year (%) Returns
Bandhan Crisil IBX Gilt April 2032 Index Fund	11.23
Invesco India Nifty G-Sec Sep 2032 Index Fund	11.23
HDFC Nifty G-Sec July 2031 Index Fund	11.21
HDFC Nifty G-Sec Sep 2032 Index Fund	11.18
Mirae Asset Crisil IBX Gilt Index – April 2033 Index Fund	11.08
DSP CRISIL-IBX 50:50 Gilt Plus SDL – April 2033 Index Fund	10.97
Kotak Nifty G-Sec July 2033 Index Fund	10.95
Aditya Birla Sun Life CRISIL IBX Gilt Apr 2033 Index Fund	10.94
Nippon India Nifty G-Sec June 2036 Maturity Index Fund	10.92
Edelweiss Crisil IBX 50:50 Gilt Plus SDL April 2037 Index Fund	10.88

Data Source: Morningstar India

The top 10 debt funds on 1-year returns have delivered average returns of 11.06%, but the good news is that the dispersion of returns in the top-10 has been very low, which is good news. The top gainers are the gilt-funds, which have benefited from the falling bond yields in India in the last few months.

PASSIVE FUND FOLIO GROWTH: JUNE 2025 OVER JUNE 2024

Despite overall folio growth being under pressure, one must admit that the folio growth in passive funds continues to be robust.

Passive Mutual Fund Schemes (Folios)	Folios Jun-25 (in Numbers)	Folios Jun-24 (in Numbers)	Growth (%)
Silver ETF	9,10,253	3,23,321	181.53%
Equity oriented ETFs (International)	9,40,437	4,60,624	104.17%
Equity oriented Index Funds (Domestic)	1,29,73,589	82,38,364	57.48%
Gold ETF	76,54,158	54,09,986	41.48%
Equity oriented ETFs (Domestic)	1,63,08,607	1,19,42,455	36.56%
Other Index Funds	99,958	76,489	30.68%
Income/Debt Oriented Index Funds (TMIF)	1,80,410	1,54,211	16.99%
Income/Debt Oriented ETFs	24,54,571	21,81,294	12.53%
FOFs investing overseas in Active Funds	7,79,996	7,39,481	5.48%
Equity oriented Index Funds (International)	2,34,123	2,46,484	-5.01%
FOF investing overseas in Passive Funds	5,95,056	7,13,800	-16.64%
Income/Debt Oriented Index Funds (Ex-TMIF)	10,454	14,924	-29.95%
Total of Passive Funds	4,31,41,612	3,05,01,433	41.44%

Data Source: AMFI (TMIF is target maturity index funds)

Here are some key inferences from the yoy growth in passive folios.

• Passive fund folios yoy growth in June 2025 stood at 41.44%; compared to 43.29% in May, 45.94% in April, and 48.31% in March 2025. While there has been a gradual tapering of folio growth of passive funds, they have still done better than active funds on the folio front. Total folios of passive funds as of June 2025 stood at 431.42 Lakhs; compared to 424.74 Lakhs in May, 418.98 Lakhs in April, and 414.72 Lakhs in March 2025. Incremental growth has certainly been slowing.
• What about the leaders? Again, silver ETFs led folio growth at 181.53%, followed by equity oriented ETFs (International) at 104.17%, equity oriented Domestic Index Funds at 57.48%, and gold funds at 41.48%. A total of 9 out of 12 categories saw folio expansion, with ex-TMIF debt oriented funds, FOFs investing in overseas passive funds, and International equity index funds witnessing folio contraction in June 2025.

Annual folio growth stayed under 50% for the fifth month in a row.

PASSIVE FUNDS AUM: JUNE 2025 OVER JUNE 2024

Despite the turmoil, the growth rate of passive funds AUM has been robust, but largely due to the MTM impact of equities.

Passive Mutual Fund Schemes	AUM Jun-25 (₹ Crore)	AUM Jun-24 (₹ Crore)	Growth (%)
Silver ETF	20,287	7,473	171.45%
Gold ETF	64,777	34,356	88.55%
Equity oriented Index Funds (Domestic)	1,91,092	1,26,019	51.64%
Equity oriented ETFs (International)	14,870	11,852	25.46%
Equity oriented ETFs (Domestic)	7,26,373	6,25,712	16.09%
Equity oriented Index Funds (International)	5,519	4,758	15.99%
FOFs investing overseas in Active Funds	20,196	17,470	15.60%
Income/Debt Oriented Index Funds (TMIF)	1,02,906	94,410	9.00%
Other Index Funds	3,736	3,453	8.20%
FOF investing overseas in Passive Funds	8,500	8,417	0.98%
Income/Debt Oriented ETFs	97,731	99,547	-1.82%
Income/Debt Oriented Index Funds (Ex-TMIF)	5,744	14,842	-61.30%
Total of Passive Funds	12,61,730	10,48,310	20.36%

Data Source: AMFI (TMIF is target maturity index funds)

Here are some key inferences we can draw from the above table.

• Passive fund AUM yoy growth in June 2025 stood at 20.36%; compared to 24.45% in May, 23.80% in April, and 22.72% in March 2025. While the growth in AUM is much lower compared to year 2024, the bounce in growth in May 2025 could not be sustained in June. Clearly, the passive fund interest seems to be taking a back seat.
• What about leaders and laggards? Silver ETFs led the growth at 171.45%, followed by Gold ETFs at 88.55%, and equity oriented domestic index funds at 51.64%. A total of 10 out of 12 categories saw AUM expansion, with ex-TMIF debt oriented index funds and debt index ETFs witnessing AUM contraction.

While the folio growth of passive funds is faltering, the AUM growth is still robust; thanks to the revival in the market. Market really needs a strong pro-passive narrative for it to grow!