There has been a gradual shift of assets from active to passive management in the US and Europe as a consequence of active managers underperforming index benchmarks, according to a report titled A Glimpse of the Future: India’s Potential in Passive Investing by S&P Dow Jones Indices. Similar trends are being observed in India. Rising assets under management (AUM) figures show that passive investing is slowly gaining ground in India, helped by local factors such as cost, stronger regulations and increasing skewness of market returns. Passive funds invest in stocks that monitor the composition of a chosen index rather than relying on a fund manager’s stock selection.
