A first: Surge in passive MF folio steals a march on active equity

Net account additions in passive mutual fund (MF) schemes overtook those in active equity funds for the first time, in September, as investors piled into gold and silver exchange-traded funds (ETFs) amid a sharp rally in precious metals.

- ABHISHEK KUMAR

Passive schemes — including index funds and ETFs — recorded 1.2 million new accounts during the month. When fund-of-fund (FoF) schemes are included, total additions rise to 2.1 million.

By contrast, active equity schemes saw 1.4 million new accounts opened in September.

Traditionally, most new mutual fund investors have favoured active equity schemes, which have generally outperformed other categories over the long term. Higher distributor commissions on active products have reinforced their dominance, with intermediaries often steering clients towards such schemes.

Active equity funds currently account for 17.5 million active accounts, or about 70 per cent of the total 25.2 million MF folios.