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What are Passive Funds?

Updated on March 25, 2024 , 67295 views

Passive funds are a type of funds that consistently tracks a Market index to allow a fund get maximum gains. It invests in a Portfolio that replicates a Market Index like Nifty, the Sensex, etc. All the securities along with their proportion in the portfolio will be the same as the index the fund is tracking.

Passive Funds

In passive funds, the fund manager does not actively choose what stocks will make up the fund. This is one of the reasons passive funds are easier to invest than active funds. Investors buy passive funds when they want their returns to be in line with the market. These funds are low-cost funds as there are no costs involved in selecting stocks and researching.

Types of Passive Funds

Passive funds are of two types, such as -

1. Index Funds

Index Funds are an open-ended scheme where the investors buy and redeem units of the Mutual Funds at the net-asset values. In other words, the performance of an index fund is dependent on the performance of a particular index. Index funds contain shares in a similar proportion as they are in a particular index.

2. Exchange Traded Funds (ETFs)

The units of exchange-traded funds are randomly listed on a stock exchange. Investors buy and sell units at real-time prices through Demat account.

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Difference Between Passive Funds and Active Funds

There are specific differences in the way they function and affect the investor.

The tabular differentiates between passive funds and active funds:

Passive Funds Active Funds
The fund manager does not actively participate in selecting funds Fund managers commit to a lot of research and take steps accordingly to select funds in various securities based on market performance
Costs less Costs more
Popularity because of the low-expense ratio Costlier management makes it less popular

How Passive Funds is Gaining Trust?

In 2019, Indian investors found that passive mutual funds were trustworthy. The total assets managed by passive funds, including gold and ETFs along with other index funds were huge. It was found that it stood at Rs. 177,181 crore on November 30, 2019. The Association of Mutual Funds in India (AMFI) stated that index funds had gathered an AUM of Rs. 7717 crore on November 2019. Passive large-cap ETFs offer returns of 11.53% compared to actively managed Large cap funds that offered 10.19%.

gold ETFs stood at Rs. 5,540.40 crore as of November 2019. This comes in comparison to Rs. 4,571 crore in December 2018. The AUM of other ETFs stood at Rs. 1,63,923.66 crore, as compared to Rs. 1,07,363 crore at the end of 2018. A large part of 2019 witnessed that large-cap schemes were at the top of return charts. Even in 2020, nine out of the top 15 large-cap schemes are passive funds.

Passive Funds Amid Coronavirus Pandemic

With the current situation across the globe, the financial markets are facing issues of deep concern. While investors were willing to take a risk in the past, today’s conditions have pushed the majority of the investors to look for a Safe Haven. This means they are looking for an investment that will yield higher returns or at least stable returns. Several investors are now looking to invest through passive modes such as exchange-traded funds or index funds. As per AMFI, Inflow into the index funds faced an all-time high of Rs. 2076.5 crore in March 2020.

Best Passive Funds 2024 - 2025

With the growing popularity of passive mutual funds, the chances of gaining higher returns are higher. Here are the best passive mutual funds you can choose to invest:

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)5 YR (%)2023 (%)
LIC MF Index Fund Sensex Growth ₹136.109
↑ 0.98
₹791.210.226.914.414.119
Nippon India Index Fund - Sensex Plan Growth ₹36.6965
↑ 0.26
₹6161.410.527.514.814.419.5
ICICI Prudential Nifty Index Fund Growth ₹219.699
↑ 1.17
₹6,9552.312.431.215.914.820.7
SBI Nifty Index Fund Growth ₹193.114
↑ 1.03
₹6,4942.212.33115.814.520.7
IDBI Nifty Index Fund Growth ₹36.2111
↓ -0.02
₹2089.111.916.220.311.7
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 27 Mar 24

*Below is the list for Index Mutual Funds having atleast 15 Crore or more in Net Assets.

1. LIC MF Index Fund Sensex

The main investment objective of the fund is to generate returns commensurate with the performance of the index either Nifty / Sensex based on the plans by investing in the respective index stocks subject to tracking errors.

LIC MF Index Fund Sensex is a Others - Index Fund fund was launched on 14 Nov 02. It is a fund with Moderately High risk and has given a CAGR/Annualized return of 13.5% since its launch.  Ranked 79 in Index Fund category.  Return for 2023 was 19% , 2022 was 4.6% and 2021 was 21.9% .

Below is the key information for LIC MF Index Fund Sensex

LIC MF Index Fund Sensex
Growth
Launch Date 14 Nov 02
NAV (27 Mar 24) ₹136.109 ↑ 0.98   (0.72 %)
Net Assets (Cr) ₹79 on 29 Feb 24
Category Others - Index Fund
AMC LIC Mutual Fund Asset Mgmt Co Ltd
Rating
Risk Moderately High
Expense Ratio 0.99
Sharpe Ratio 1.39
Information Ratio -8.06
Alpha Ratio -1.08
Min Investment 5,000
Min SIP Investment 1,000
Exit Load 0-1 Months (1%),1 Months and above(NIL)

Growth of 10,000 investment over the years.

DateValue
28 Feb 19₹10,000
29 Feb 20₹10,704
28 Feb 21₹13,751
28 Feb 22₹15,750
28 Feb 23₹16,538
29 Feb 24₹20,385

LIC MF Index Fund Sensex SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹300,000
expected amount after 5 Years is ₹436,710.
Net Profit of ₹136,710
Invest Now

Returns for LIC MF Index Fund Sensex

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 27 Mar 24

DurationReturns
1 Month -0.2%
3 Month 1.2%
6 Month 10.2%
1 Year 26.9%
3 Year 14.4%
5 Year 14.1%
10 Year
15 Year
Since launch 13.5%
Historical performance (Yearly) on absolute basis
YearReturns
2023 19%
2022 4.6%
2021 21.9%
2020 15.9%
2019 14.6%
2018 5.6%
2017 27.4%
2016 1.6%
2015 -5.4%
2014 29.3%
Fund Manager information for LIC MF Index Fund Sensex
NameSinceTenure
Sumit Bhatnagar3 Oct 230.41 Yr.

Data below for LIC MF Index Fund Sensex as on 29 Feb 24

Asset Allocation
Asset ClassValue
Cash0.11%
Equity99.89%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
HDFC Bank Ltd (Financial Services)
Equity, Since 31 Mar 09 | HDFCBANK
13%₹10 Cr72,652
↓ -2,149
Reliance Industries Ltd (Energy)
Equity, Since 31 Mar 09 | RELIANCE
12%₹10 Cr33,027
↓ -1,002
ICICI Bank Ltd (Financial Services)
Equity, Since 30 Apr 09 | 532174
9%₹7 Cr67,279
↓ -1,940
Infosys Ltd (Technology)
Equity, Since 31 Mar 09 | INFY
7%₹6 Cr34,299
↓ -860
Tata Consultancy Services Ltd (Technology)
Equity, Since 31 Mar 09 | TCS
5%₹4 Cr9,915
↓ -223
Larsen & Toubro Ltd (Industrials)
Equity, Since 31 Mar 09 | LT
5%₹4 Cr11,610
↓ -348
ITC Ltd (Consumer Defensive)
Equity, Since 30 Sep 11 | ITC
4%₹3 Cr85,069
↓ -1,863
Axis Bank Ltd (Financial Services)
Equity, Since 31 Dec 13 | 532215
4%₹3 Cr26,975
↓ -1,080
State Bank of India (Financial Services)
Equity, Since 31 Mar 09 | SBIN
3%₹3 Cr36,970
↓ -721
Bharti Airtel Ltd (Communication Services)
Equity, Since 30 Apr 09 | BHARTIARTL
3%₹3 Cr24,238
↓ -692

2. Nippon India Index Fund - Sensex Plan

The primary investment objective of the scheme is to replicate the composition of the Sensex, with a view to generate returns that are commensurate with the performance of the Sensex, subject to tracking errors.

Nippon India Index Fund - Sensex Plan is a Others - Index Fund fund was launched on 28 Sep 10. It is a fund with Moderately High risk and has given a CAGR/Annualized return of 10.1% since its launch.  Ranked 74 in Index Fund category.  Return for 2023 was 19.5% , 2022 was 5% and 2021 was 22.4% .

Below is the key information for Nippon India Index Fund - Sensex Plan

Nippon India Index Fund - Sensex Plan
Growth
Launch Date 28 Sep 10
NAV (27 Mar 24) ₹36.6965 ↑ 0.26   (0.72 %)
Net Assets (Cr) ₹616 on 29 Feb 24
Category Others - Index Fund
AMC Nippon Life Asset Management Ltd.
Rating
Risk Moderately High
Expense Ratio 0.74
Sharpe Ratio 1.43
Information Ratio -8.54
Alpha Ratio -0.66
Min Investment 5,000
Min SIP Investment 100
Exit Load 0-7 Days (0.25%),7 Days and above(NIL)

Growth of 10,000 investment over the years.

DateValue
28 Feb 19₹10,000
29 Feb 20₹10,673
28 Feb 21₹13,787
28 Feb 22₹15,855
28 Feb 23₹16,706
29 Feb 24₹20,670

Nippon India Index Fund - Sensex Plan SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹300,000
expected amount after 5 Years is ₹436,710.
Net Profit of ₹136,710
Invest Now

Returns for Nippon India Index Fund - Sensex Plan

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 27 Mar 24

DurationReturns
1 Month -0.2%
3 Month 1.4%
6 Month 10.5%
1 Year 27.5%
3 Year 14.8%
5 Year 14.4%
10 Year
15 Year
Since launch 10.1%
Historical performance (Yearly) on absolute basis
YearReturns
2023 19.5%
2022 5%
2021 22.4%
2020 16.6%
2019 14.2%
2018 6.2%
2017 27.9%
2016 2%
2015 -4.7%
2014 28.7%
Fund Manager information for Nippon India Index Fund - Sensex Plan
NameSinceTenure
Himanshu Mange23 Dec 230.19 Yr.

Data below for Nippon India Index Fund - Sensex Plan as on 29 Feb 24

Asset Allocation
Asset ClassValue
Cash0.01%
Equity99.99%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
HDFC Bank Ltd (Financial Services)
Equity, Since 31 Oct 10 | HDFCBANK
13%₹79 Cr564,713
↑ 10,512
Reliance Industries Ltd (Energy)
Equity, Since 31 Oct 10 | RELIANCE
12%₹75 Cr256,764
↑ 4,780
ICICI Bank Ltd (Financial Services)
Equity, Since 31 Oct 10 | 532174
9%₹55 Cr521,465
↑ 9,707
Infosys Ltd (Technology)
Equity, Since 31 Oct 10 | INFY
7%₹44 Cr265,607
↑ 4,944
Larsen & Toubro Ltd (Industrials)
Equity, Since 29 Feb 12 | LT
5%₹31 Cr89,965
↑ 1,675
Tata Consultancy Services Ltd (Technology)
Equity, Since 31 Oct 10 | TCS
5%₹31 Cr76,239
↑ 1,419
ITC Ltd (Consumer Defensive)
Equity, Since 29 Feb 12 | ITC
4%₹27 Cr658,912
↑ 12,265
Axis Bank Ltd (Financial Services)
Equity, Since 31 Dec 13 | 532215
4%₹23 Cr211,018
↑ 3,928
State Bank of India (Financial Services)
Equity, Since 31 Oct 10 | SBIN
3%₹21 Cr285,568
↑ 5,315
Bharti Airtel Ltd (Communication Services)
Equity, Since 31 Oct 10 | BHARTIARTL
3%₹21 Cr188,204
↑ 3,503

3. ICICI Prudential Nifty Index Fund

(Erstwhile ICICI Prudential Nifty Index Fund)

An open-ended index linked growth scheme seeking to track the returns of the S&P CNX Nifty index through investment in a basket of stocks drawn from the constituents of the Nifty.

ICICI Prudential Nifty Index Fund is a Others - Index Fund fund was launched on 26 Feb 02. It is a fund with Moderately High risk and has given a CAGR/Annualized return of 15% since its launch.  Ranked 71 in Index Fund category.  Return for 2023 was 20.7% , 2022 was 5.2% and 2021 was 24.9% .

Below is the key information for ICICI Prudential Nifty Index Fund

ICICI Prudential Nifty Index Fund
Growth
Launch Date 26 Feb 02
NAV (27 Mar 24) ₹219.699 ↑ 1.17   (0.54 %)
Net Assets (Cr) ₹6,955 on 29 Feb 24
Category Others - Index Fund
AMC ICICI Prudential Asset Management Company Limited
Rating
Risk Moderately High
Expense Ratio 0.39
Sharpe Ratio 1.74
Information Ratio -8.68
Alpha Ratio -0.4
Min Investment 5,000
Min SIP Investment 100
Exit Load NIL

Growth of 10,000 investment over the years.

DateValue
28 Feb 19₹10,000
29 Feb 20₹10,441
28 Feb 21₹13,591
28 Feb 22₹15,812
28 Feb 23₹16,410
29 Feb 24₹20,995

ICICI Prudential Nifty Index Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹300,000
expected amount after 5 Years is ₹436,710.
Net Profit of ₹136,710
Invest Now

Returns for ICICI Prudential Nifty Index Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 27 Mar 24

DurationReturns
1 Month -0.3%
3 Month 2.3%
6 Month 12.4%
1 Year 31.2%
3 Year 15.9%
5 Year 14.8%
10 Year
15 Year
Since launch 15%
Historical performance (Yearly) on absolute basis
YearReturns
2023 20.7%
2022 5.2%
2021 24.9%
2020 15.2%
2019 12.8%
2018 3.4%
2017 28.7%
2016 3.6%
2015 -3.6%
2014 32.5%
Fund Manager information for ICICI Prudential Nifty Index Fund
NameSinceTenure
Nishit Patel18 Jan 213.12 Yr.
Priya Sridhar1 Feb 240.08 Yr.
Ajaykumar Solanki1 Feb 240.08 Yr.

Data below for ICICI Prudential Nifty Index Fund as on 29 Feb 24

Asset Allocation
Asset ClassValue
Cash0.06%
Equity99.94%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
HDFC Bank Ltd (Financial Services)
Equity, Since 31 Mar 05 | HDFCBANK
12%₹781 Cr5,342,785
↑ 128,975
Reliance Industries Ltd (Energy)
Equity, Since 31 Mar 05 | RELIANCE
10%₹686 Cr2,405,160
↑ 58,058
ICICI Bank Ltd (Financial Services)
Equity, Since 31 Mar 05 | ICICIBANK
8%₹513 Cr4,986,940
↑ 120,386
Infosys Ltd (Technology)
Equity, Since 31 Mar 05 | INFY
6%₹422 Cr2,537,784
↑ 61,261
Larsen & Toubro Ltd (Industrials)
Equity, Since 29 Feb 12 | LT
4%₹292 Cr840,465
↑ 20,287
ITC Ltd (Consumer Defensive)
Equity, Since 29 Feb 12 | ITC
4%₹278 Cr6,297,715
↑ 152,032
Tata Consultancy Services Ltd (Technology)
Equity, Since 31 Mar 05 | TCS
4%₹275 Cr720,272
↑ 17,383
Axis Bank Ltd (Financial Services)
Equity, Since 31 Mar 09 | 532215
3%₹211 Cr1,973,220
↑ 47,629
Bharti Airtel Ltd (Communication Services)
Equity, Since 31 Aug 09 | BHARTIARTL
3%₹211 Cr1,798,657
↑ 43,418
Kotak Mahindra Bank Ltd (Financial Services)
Equity, Since 29 Feb 12 | KOTAKBANK
3%₹191 Cr1,045,699
↑ 25,240

4. SBI Nifty Index Fund

The scheme will adopt a passive investment strategy. The scheme will invest in stocks comprising the Nifty 50 Index in the same proportion as in the index with the objective of achieving returns equivalent to the Total Returns Index of Nifty 50 Index by minimizing the performance difference between the benchmark index and the scheme. The Total Returns Index is an index that reflects the returns on the index from index gain/loss plus dividend payments by the constituent stocks.

SBI Nifty Index Fund is a Others - Index Fund fund was launched on 17 Jan 02. It is a fund with Moderately High risk and has given a CAGR/Annualized return of 14.5% since its launch.  Ranked 75 in Index Fund category.  Return for 2023 was 20.7% , 2022 was 5.1% and 2021 was 24.7% .

Below is the key information for SBI Nifty Index Fund

SBI Nifty Index Fund
Growth
Launch Date 17 Jan 02
NAV (27 Mar 24) ₹193.114 ↑ 1.03   (0.54 %)
Net Assets (Cr) ₹6,494 on 29 Feb 24
Category Others - Index Fund
AMC SBI Funds Management Private Limited
Rating
Risk Moderately High
Expense Ratio 0.5
Sharpe Ratio 1.72
Information Ratio -15.98
Alpha Ratio -0.54
Min Investment 5,000
Min SIP Investment 500
Exit Load 0-15 Days (0.2%),15 Days and above(NIL)

Growth of 10,000 investment over the years.

DateValue
28 Feb 19₹10,000
29 Feb 20₹10,406
28 Feb 21₹13,483
28 Feb 22₹15,664
28 Feb 23₹16,243
29 Feb 24₹20,758

SBI Nifty Index Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹300,000
expected amount after 5 Years is ₹436,710.
Net Profit of ₹136,710
Invest Now

Returns for SBI Nifty Index Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 27 Mar 24

DurationReturns
1 Month -0.4%
3 Month 2.2%
6 Month 12.3%
1 Year 31%
3 Year 15.8%
5 Year 14.5%
10 Year
15 Year
Since launch 14.5%
Historical performance (Yearly) on absolute basis
YearReturns
2023 20.7%
2022 5.1%
2021 24.7%
2020 14.6%
2019 12.5%
2018 3.8%
2017 29.1%
2016 3.4%
2015 -4.2%
2014 30.5%
Fund Manager information for SBI Nifty Index Fund
NameSinceTenure
Raviprakash Sharma1 Feb 1113.09 Yr.
Mohit Jain30 Nov 176.25 Yr.

Data below for SBI Nifty Index Fund as on 29 Feb 24

Asset Allocation
Asset ClassValue
Equity100.52%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
HDFC Bank Ltd (Financial Services)
Equity, Since 31 Mar 03 | HDFCBANK
11%₹715 Cr5,093,077
↑ 201,290
Reliance Industries Ltd (Energy)
Equity, Since 31 Jan 03 | RELIANCE
10%₹670 Cr2,292,749
↑ 90,611
ICICI Bank Ltd (Financial Services)
Equity, Since 31 Jan 03 | ICICIBANK
8%₹500 Cr4,753,870
↑ 187,888
Infosys Ltd (Technology)
Equity, Since 31 Jan 03 | INFY
6%₹405 Cr2,419,176
↑ 95,609
Tata Consultancy Services Ltd (Technology)
Equity, Since 28 Feb 05 | TCS
4%₹281 Cr686,610
↑ 27,131
Larsen & Toubro Ltd (Industrials)
Equity, Since 31 Dec 04 | LT
4%₹279 Cr801,188
↑ 31,663
ITC Ltd (Consumer Defensive)
Equity, Since 29 Feb 12 | ITC
4%₹244 Cr6,003,377
↑ 237,267
Axis Bank Ltd (Financial Services)
Equity, Since 28 Feb 10 | 532215
3%₹202 Cr1,880,999
↑ 74,344
State Bank of India (Financial Services)
Equity, Since 31 Jan 03 | SBIN
3%₹195 Cr2,600,957
↑ 102,796
Bharti Airtel Ltd (Communication Services)
Equity, Since 29 Feb 04 | BHARTIARTL
3%₹193 Cr1,714,597
↑ 67,765

5. IDBI Nifty Index Fund

The investment objective of the scheme is to invest in the stocks and equity related instruments comprising the S&P CNX Nifty Index in the same weights as these stocks represented in the Index with the intent to replicate the performance of the Total Returns Index of S&P CNX Nifty index. The scheme will adopt a passive investment strategy and will seek to achieve the investment objective by minimizing the tracking error between the S&P CNX Nifty index (Total Returns Index) and the scheme.

IDBI Nifty Index Fund is a Others - Index Fund fund was launched on 25 Jun 10. It is a fund with Moderately High risk and has given a CAGR/Annualized return of 10.3% since its launch.  Ranked 83 in Index Fund category. .

Below is the key information for IDBI Nifty Index Fund

IDBI Nifty Index Fund
Growth
Launch Date 25 Jun 10
NAV (28 Jul 23) ₹36.2111 ↓ -0.02   (-0.06 %)
Net Assets (Cr) ₹208 on 30 Jun 23
Category Others - Index Fund
AMC IDBI Asset Management Limited
Rating
Risk Moderately High
Expense Ratio 0.9
Sharpe Ratio 1.04
Information Ratio -3.93
Alpha Ratio -1.03
Min Investment 5,000
Min SIP Investment 500
Exit Load NIL

Growth of 10,000 investment over the years.

DateValue
28 Feb 19₹10,000
29 Feb 20₹10,390
28 Feb 21₹13,464
28 Feb 22₹15,499
28 Feb 23₹16,007

IDBI Nifty Index Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹300,000
expected amount after 5 Years is ₹405,518.
Net Profit of ₹105,518
Invest Now

Returns for IDBI Nifty Index Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 27 Mar 24

DurationReturns
1 Month 3.7%
3 Month 9.1%
6 Month 11.9%
1 Year 16.2%
3 Year 20.3%
5 Year 11.7%
10 Year
15 Year
Since launch 10.3%
Historical performance (Yearly) on absolute basis
YearReturns
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
Fund Manager information for IDBI Nifty Index Fund
NameSinceTenure

Data below for IDBI Nifty Index Fund as on 30 Jun 23

Asset Allocation
Asset ClassValue
Top Securities Holdings / Portfolio
NameHoldingValueQuantity

Conclusion

Passive funds are definitely proving to be a ray of hope for investors, especially in the current financial crisis. Before Investing in any passive mutual fund, make sure to read all schemes related documents carefully. This will help you gain an understanding of what to expect and what to give along with a sense of security.

Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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