A number quietly crossed ₹15 lakh crore in India’s mutual fund industry recently, and most people outside the finance pages never noticed. That number represents money sitting in passive funds and ETFs, and its growth curve over the past six years tells a genuinely interesting story about how Indian investors have changed their habits.
From 2020 To Now: How Fast This Actually Grew
Back in January 2020, before COVID reshaped nearly everything, passive fund assets in India sat around ₹1.92 lakh crore. By February 2026, that figure had grown roughly eightfold to around ₹15.24 lakh crore, even after a slight dip from January’s record high due to routine mark to market adjustments. Passive funds now make up close to 18.6% of the entire mutual fund industry, up from just about 8% back in 2020. That’s not a gentle upward drift, it’s a genuine structural shift in where retail money is choosing to sit.
How February 2026’s Passive Inflows Broke Down
| Category | Month-End AUM |
|---|---|
| Domestic equity ETFs | ₹9.76 lakh crore |
| Index funds | ₹3.25 lakh crore |
| Gold ETFs | ₹1.83 lakh crore |
| Overseas fund of funds | ₹0.40 lakh crore |
Why Retail Investors Keep Choosing To Invest In ETF Options
Cost sits near the top of the list. Passive funds typically charge somewhere between 0.1% and 0.5%, compared to 1% to 2% for actively managed funds, and that gap compounds meaningfully over a ten or fifteen year horizon. Consistency matters too. Plenty of actively managed large cap funds have struggled to beat their own benchmark over five to ten year stretches, while a fund built simply to track that same benchmark delivers close to market return by design. For investors deciding to invest in ETF options over picking individual stocks, this combination of lower cost and steadier outcomes tends to be the deciding factor.
The Habit Driving The Inflows: SIPs Meet Passive Funds
Passive investing pairs unusually well with systematic investment plans, since both rely on consistency rather than timing the market. SIP inflows into passive products hit a record near ₹39,955 crore in January 2026 alone, and stayed strong at ₹13,879 crore in February despite fewer trading days and some market correction. This rules based, set it and forget it approach suits investors who’d rather avoid the noise of stock picking entirely, choosing instead to invest in ETF options through a recurring, automated habit.
Where This Still Falls Short: India Versus The US
India’s passive investing penetration, while growing quickly, still sits well below markets like the US, where passive assets already exceed half of total mutual fund holdings. India’s overall mutual fund industry has tripled over five years, yet passive growth has outpaced even that faster overall expansion, suggesting a genuine, conscious shift away from active fund selection rather than passive assets simply riding the industry’s general growth.
Getting Started With ETFs Today
For someone ready to invest in ETF options for the first time, the process has become considerably simpler than it used to be:
- Open a demat and trading account through a registered broker
- Complete KYC verification, which is now largely digital
- Research index funds, equity ETFs, or Gold ETFs based on personal goals
- Set up a SIP or place a lump sum order directly through a trading platform
- Track performance periodically rather than reacting to daily market noise
The Role Of A Share Market App In This Shift
Much of this growth simply wouldn’t have happened at this pace without a decent share market app putting the entire process in someone’s pocket. A good share market app removes the friction that used to keep casual investors away, letting someone browse ETF options, place an order, and track a SIP schedule without ever visiting a branch office. Digital platforms and a genuinely usable share market app have done as much to drive this shift as the cost advantage of the funds themselves.
What The Next Few Years Might Look Like
Industry estimates suggest passive assets could climb toward 25% to 30% of total mutual fund AUM by 2028 to 2030, up from roughly 18% today. Even so, a relatively small share of India’s population currently invests in financial markets at all, meaning there’s considerable room left for this shift to keep compounding as awareness and access continue to spread across smaller cities.
Bringing It All Together
Lower costs, steadier long term performance, and the sheer convenience of a modern share market app have combined to make passive investing one of the more genuine structural shifts in Indian retail finance in recent years. For investors weighing whether to invest in ETF options as part of a long term plan, the underlying numbers make a fairly compelling case on their own.