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Large-cap active funds are struggling to surpass their benchmarks, prompting fund firms to offer passive options, the report said.
The number of new-fund offers (NFOs) from passive funds is steadily increasing. At least 6 NFOs in this space are open for subscriptions, says The Economic Times report. There are more are in the offing from newcomers such as NAVI MF and established fund houses HDFC MF and Mirae MF.
The Economic Times quoted Abhilash Joseph, business head, Finity, as saying that active funds underperform, while lower expenses and regulations and policies encourage investments in passive products.
ICICI Prudential Small Cap Index Fund, DSP Nifty Equal-Weight 50 ETF, HDFC Nifty Next 50 Fund, ICICI Prudential Consumption ETF, Aditya Birla Nasdaq 100 FoF, and Aditya Birla Sunlife Nifty IT ETF are among the passive NFOs open.
The report quoted Swarup Mohanty, CEO, Mirae Asset Mutual Fund, as saying that with proper ideation, one can make products.
Passive funds
Large-cap active funds are struggling to surpass their benchmarks, prompting fund firms to offer passive options, the report said.
Ease of buying and holding make passive exchange-traded funds (ETFs) a preferable choice for new-Gen investors coming through fintech platforms, according to the report.
The number of new Demat accounts opened via fintech apps in the last one year has gone up Vijay Kuppa, Founder, Orowealth, is quoted as saying.
As this type of investor would construct ETF-only portfolios, fund houses want to launch their own ETFs so as to avoid ceding market share.
While the Nifty 50 and Nifty Next 50 are the most popular passive funds, financial planners recommend that rich investors consider the Nasdaq 100, IT ETFs, healthcare ETFs, CPSE ETF, Bharat 22 ETF, and PSU Bank ETF.