Passive mutual fund inflows continue for 55th straight month; Gold ETFs turn positive

Passive mutual funds witnessed net inflows for the 55th consecutive month in May, according to data from the Association of Mutual Funds in India (AMFI). The category, which includes exchange-traded funds (ETFs), index funds, and fund-of-funds investing in passive strategies, continues to grow steadily.

Net inflows into ETFs stood at ₹4,086.8 crore in May, although lower than the ₹19,056.66 crore recorded in April. Gold ETFs reversed course, registering inflows of ₹292 crore in May compared to an outflow of ₹5.82 crore in the previous month.

As per AMFI’s annual mutual fund report, passive fund inflows surged to ₹1.4 lakh crore in FY25, up from ₹60,000 crore in FY24.

The trend is also supported by a growing number of new fund offerings, with several asset management companies such as Zerodha Mutual Fund and Tata AMC actively expanding their passive product lines.
Hybrid funds also saw increased traction in May, with categories like arbitrage, balanced advantage funds (BAFs), and multi-asset funds attracting inflows. These categories often gain favour in volatile markets due to their diversified exposure and relative stability.

Commenting on the trend, Vikas Gupta, CEO & Chief Investment Strategist at OmniScience Capital, said, “Indian investors are becoming more mature and are allocating rationally. Flexicap and multicap allocations continue, while small-cap funds are seeing lower inflows due to valuation concerns. Sector funds are still receiving interest, but investors need to be cautious about valuations to avoid bubbles.”

Suranjana Borthakur, Head of Distribution & Strategic Alliances at Mirae Asset Investment Managers (India), added, “While equity inflows moderated in May, the rise in hybrid categories like arbitrage and BAFs suggests investors are using these tools strategically to manage short-term market volatility.”

The mutual fund industry’s total assets under management (AUM) rose to ₹72.2 lakh crore in May, up from ₹70 lakh crore in April.

Despite seasonal moderation in equity inflows—common during April and May—passive and hybrid categories are showing resilience and growing investor adoption.