Listen to this article
Over the last one year, the MF industry has witnessed significant growth in the AUM of passive funds, folios and no. of schemes.
While Passives AUM has grown by 63% to Rs. 4.80 lakh crore in March 22, the number of passive folio count grew multiple times to cross the one crore mark in one year. The number of passive schemes has also increased to 217 as on March 2022.
To understand what MFDs/RIAs think about passive funds, we spoke to renowned MFDs/RIAs present at Cafemutual Passives Conference 2022 (CPC 2022).
Let us see what they have to say.
Gajendra Kothari of Etica Wealth Management has started recommending passive funds to his clients. He said, “Passives is an interesting approach to investment and with the innovations happening in this segment, there is definitely some space to get started in clients’ portfolios.”
Gajendra further said that passives have a lot more role to play in the large cap space where alpha generation has become difficult. Also, factor-based investing can help in addressing diverse investors’ preferences like low volatility, high momentum, etc.
Ritesh Sheth of Tejas Consultancy recommends passives to his cost-conscious investors for diversification.
Similarly, with the availability of a wide range of passive products, Sandeep Bhushetty of Chatur Investments feels passives can give adequate international exposure to investors.
On the other hand, Harshavardhan Bhusari of FIN PALS is currently testing the waters by investing his funds to understand passives closely. He believes that the absence of human intervention rules out the possibility of behavioural biases here. However, this could also be a drawback when human intervention is essential.
Commenting on the growing passives AUM, Vivek Rege of V R Wealth Advisors said, “We have reached from the stage of innovators to early adopters. The early adopters are essentially influential people, family offices and institutional investors. All in all, there is a lot of traction amongst them as they understand the importance of passives in their portfolio.”
Vivek feels that the investment policy and asset allocation are the starting point for selecting a passive fund.
On active v/s passive, Shifali Satsangee of Funds Ve'daa believes that active and passives complement each other and are good enough to co-exist.
Lovaii Navlakhi of International Money Matters feels that investors should build a passive portfolio like the rest of their portfolio. They should first start with an Index ETF and then experiment with different varieties. Track record, tracking error, AUM size and expense ratio will be some of the key evaluating parameters here.
