Passive investments to account for 25-30% of total MF AUM by 2030: DSP Mutual Fund

DSP Mutual Fund (DSP MF), a leading asset manager, is very bullish on the prospects of passive investing, i.e. ETFs and index funds, in the country and expects the MF industry to account for 25-30 per cent of the total AUM by 2030. The top official said. “We are optimistic about inaction. We will create differentiated products that will give investors a better investment experience”, Gurjit Singh Kalra, Business Head-Passive Funds, DSP MF, said here on Thursday.

India’s mutual fund industry, which is on the rise, is expected to double its AUM to ₹100 lakh crore by 2030. In India, over the last three years, total passive AUM has seen a strong 182 percent growth at ₹9.5. -lakh crore, which is about 15-17 per cent of the total MF industry asset size.

Of this, DSP MF currently has passive AUM of about ₹10,066 crore, which is significantly higher than the ₹275 crore AUM in December 2020. As of December 2022, the passive AUM of this fund house stood at ₹2,614 crore.

low cost method

Passive investments such as index funds (Funds that track a specific market index) and exchange-traded funds (ETFs – which are traded like stocks) to provide investors with a simple, low-cost way to gain access to the market.

They reduce human bias, follow transparent rules and help retail investors build portfolios better suited to their investment goals.

Globally, passive investing has seen tremendous growth and in the US now more than 50 percent of total assets are in passive funds.

Strategies like equal weight indices (indices where each stock is given equal weighting rather than being weighted by market capitalisation), which have worked well internationally, are catching on in India too, Kalra said.

DSP Mutual Fund was the first to launch an equal weighting index fund in 2017 and an ETF in 2021 after researching and testing this strategy. DSP’s equal weight index fund has increased more than tenfold.

Kalra said investor education is important to create awareness about simple passive products that can serve as a good starting point for the investment journey.