Passive Funds grow Folios by 33.3%, AUM by 24.7% in May 2026
At ₹362 crore, passive inflows in May 2026 were the lowest in recent memory. On a yoy basis, the growth in passive folios and passive AUM is still impressive, but there is clear drop in momentum.
PASSIVE FLOWS DOWN TO A TRICKLE; IMPACT GROWTH
At ₹362 crore, passive inflows in May 2026 were the lowest in recent memory. On a yoy basis, the growth in passive folios and passive AUM is still impressive, but there is clear drop in momentum. While folios did not contract in May (unlike April), the growth has surely become very tepid. Among the 12 categories of passive funds, 6 categories saw net outflows in May 2026. As of May end, the AUM leaders in the passive space were; equity index ETFs, equity index funds, and gold ETFs in that order. The pressure on flows in gold ETFs and silver ETFs is clearly an outcome of global precious metals volatility.
| Passive Fund Schemes | May-26 Folios | YOY (%) | May-26 AUM | YOY (%) | Net flows # |
|---|---|---|---|---|---|
| Equity Index Funds (Domestic) | 1,47,56,357 | 16.17% | 2,25,251.07 | 23.73% | 2,782.42 |
| Equity Index Funds (International) | 2,91,491 | 22.76% | 8,210.29 | 55.72% | 13.64 |
| Debt Index Funds (TMIF) | 1,70,378 | -8.52% | 88,348.36 | -14.87% | -993.75 |
| Debt Index Funds (Ex-TMIF) | 34,906 | 270.91% | 6,712.57 | 11.45% | -864.54 |
| Other Index Funds | 1,16,797 | 17.74% | 3,872.43 | 4.85% | 5.50 |
| Gold ETF | 1,23,40,801 | 67.47% | 1,84,570.85 | 195.54% | -725.04 |
| Equity oriented ETFs (Domestic) | 1,90,09,356 | 16.88% | 7,59,937.51 | 7.77% | 6,691.57 |
| Equity oriented ETFs (International) | 11,94,052 | 28.88% | 21,212.35 | 51.77% | 0.00 |
| Debt oriented ETFs | 16,66,021 | -32.42% | 92,748.27 | -5.35% | -5,178.63 |
| Silver ETF | 51,54,393 | 515.30% | 86,216.86 | 411.18% | -2,133.15 |
| FOFs on overseas Active Funds | 13,64,332 | 75.87% | 38,630.22 | 104.22% | 816.27 |
| FOFs on overseas Passive Funds | 5,27,190 | -12.35% | 10,799.96 | 33.36% | -52.30 |
| Total of Passive Funds | 5,66,26,074 | 33.32% | 15,26,510.75 | 24.69% | 361.98 |
Data Source: AMFI (Figures are ₹ in Crore) # - flows pertain to May 2026
PASSIVE FLOW STORY IN MAY 2026
- Overall passive fund flows at ₹362 crore in May 2026 was the lowest in recent memory; with pressure from debt index ETFs and precious metals ETFs.
- For May 2026, gold ETFs saw net outflows of ₹(725) crore while silver ETFs saw net outflows of ₹(2,133) crore as lure of gold and silver has been fading for investors.
- Equity index ETFs saw fairly robust inflows of ₹6,692 crore, but that was more than offset by outflows from debt index ETFs on account of rate hike concerns.
- Passive Investors are discovering merits of global investing, as evident from inflows into FOFs on overseas active funds. It is offering diversification and higher returns.
- The selling in debt-oriented index ETFs can be largely attributed to fears of an interest rate hike by the RBI, which could raise bond yields and depress bond prices.
WHAT WE READ FROM THE FOLIO AND AUM STORY IN MAY 2026
AUM growth reflects bullish and bearish sentiments; while folios are more secular.
- Let us look at folio growth yoy for the year to May 2026. Silver ETFs at 515%, non-TMIF debt funds at 271%, and Gold ETFs at 67.5% were the big drivers of folio growth. Debt Index ETFs and FOFs on overseas passive funds saw folio contraction.
- The surge in folios of gold and silver ETFs can be attributed to the 46-year record returns on gold and silver in 2025. The AUM of gold and silver ETFs combined stands at over ₹2.71 trillion, a near 3.5X growth over the last one year.
- What about the AUM growth story on yoy basis. Again, it was silver ETFs at 411% and gold ETFs at 196% that ruled the roost. For a change, the FOFs on overseas active funds also saw folio accretion of 104% on a yoy basis.
- On an overall basis, the rate of growth in folios and the growth in AUM have been tapering for passive funds. This can be attributed to higher base effect; as well as to the investor concerns over persistent FPI selling, MSCI weight cut, and volatility.
There are 3 interesting trends emerging from passive funds in last 1 year. Firstly, there appears to be a shift out of debt index ETFs due to concerns over the impact of rate hikes on longer term debt. Secondly, the pace of flows into equity index ETFs and precious metals ETFs are slowing due to higher base and boredom effect. Finally, the surprise package appears to be a surge in global index investing; as a means of spreading risk and raking in higher returns. That strategy seems to be working!
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