India's passive funds industry closed May 2026 on a broadly stable note, with total assets under management (AUM) edging up marginally to Rs. 14.77 trillion from Rs. 14.74 trillion in April 2026. The headline number masks a more nuanced picture: aggregate net flows turned negative at Rs. –4.02 billion for the month, as robust equity inflows were offset by sharp outflows from debt and commodity passive funds. The report's central message, however, is clear: the industry remains structurally healthy, with stable AUM, expanding product choice, and sustained investor engagement.
The industry now spans 701 schemes across 333 ETFs and 368 Index Funds, and has accumulated 54.7 million investor folios. ETFs continue to dominate by AUM at 77% (Rs. 11.45 trillion), with Index Funds accounting for the remaining 23% (Rs. 3.32 trillion). By folio count, ETFs hold 72% of all accounts (39.4 million) against Index Funds at 28% (15.4 million).
Passive Funds AUM Composition May 2026
How Is India's Passive Fund Universe Evolving?
Of the 701 total passive schemes as of May 2026, equity-oriented products account for 509 schemes (73%), cementing equity's position as the primary product category. Debt follows with 139 schemes (20%), commodity with 44 (6%), and others at 9 (1%). Twelve new schemes launched in May alone, 6 ETFs and 6 Index Funds, of which 10 were equity-oriented.
Scheme and New Launch Summary, May 2026
All New Schemes Launched, May 2026
Where Did Investor Money Flow in May 2026?
Equity continues to be the dominant structural allocation in India's passive universe, absorbing Rs. 94.88 billion in net inflows during May 2026, split between equity ETFs (Rs. 66.92 billion) and equity index funds (Rs. 27.96 billion). Despite this, equity ETF AUM edged slightly lower to Rs. 7.81 trillion from Rs. 7.85 trillion in April, as underlying market declines more than offset fresh allocations.
Within equity ETFs, broad market funds remain overwhelmingly dominant. The SBI Nifty 50 ETF commands Rs. 2.05 trillion in AUM, the single largest passive fund in India, followed by SBI BSE SENSEX ETF at Rs. 1.16 trillion. Among AMCs, SBI Funds Management leads equity ETF AUM at Rs. 3.29 trillion, followed by Nippon Life at Rs. 1.41 trillion and ICICI Prudential at Rs. 1.27 trillion.
Top 5 Equity ETFs by AUM May 2026
Top 5 AMCs Equity ETF AUM (May 2026)
Why Did Debt Passive Funds Experience Heavy Outflows?
Debt passive funds faced the sharpest pressure in May 2026, recording aggregate net outflows of Rs. 70.37 billion. Debt ETFs accounted for Rs. 51.79 billion of this, pulling debt ETF AUM to Rs. 0.93 trillion from Rs. 0.98 trillion in April 2026. Debt index funds saw a further Rs. 18.58 billion in outflows, with AUM moderating to Rs. 0.95 trillion from Rs. 0.96 trillion.
The outflow is concentrated in Target Maturity funds. The Bharat Bond ETF – April 2030 remains the largest Target Maturity ETF at Rs. 248.60 billion, followed by the April 2031 series at Rs. 131.42 billion. In the Money Market segment, Nippon India ETF Nifty 1D Rate Liquid Bees leads with Rs. 111.48 billion, followed by Zerodha Nifty 1D Rate Liquid ETF at Rs. 96.33 billion. G-Sec exposure is anchored by the SBI Nifty 10-year Benchmark G-Sec ETF at Rs. 32.32 billion.
Policy tailwinds are expected to support this segment: tax relief on FPI investments in government securities is intended to improve post-tax returns and attract greater foreign participation in India's fixed-income passive space.
Debt ETF AUM by Index Type May 2026
Why Did Commodity Fund AUM Rise Despite Investor Redemptions?
India's commodity passive funds witnessed net outflows of Rs. 28.58 billion in May 2026, with silver ETFs leading redemptions at Rs. 21.33 billion and gold ETFs contributing Rs. 7.25 billion. Despite the withdrawals, commodity AUM held firm: silver ETF assets rose to Rs. 0.86 trillion, and gold ETF assets climbed to Rs. 1.85 trillion, both benefiting from appreciation in underlying metal prices.
Who Holds India's Passive Funds?
One of the most structurally important insights from the report is the contrast between who owns passive fund assets versus who holds passive fund accounts. As of March 2026, corporates dominate passive AUM with a 70% share (Rs. 9.56 trillion), followed by HNIs at 21% (Rs. 2.84 trillion) and retail investors at just 9% (Rs. 1.30 trillion).
The picture inverts completely when viewed through the folio lens. Retail investors account for 93% of all passive fund accounts (51.6 million folios), with HNIs at 6% and corporates at just 1%. Within ETFs specifically, the institutional skew is even sharper: corporates hold 79% of ETF AUM while retail holds only 5%. Yet retail investors account for 93% of ETF folios.
How Has ETF Liquidity Changed Over the Past Five Years?
Average daily ETF turnover reached Rs. 45.56 billion during April–May 2026, rising sharply from Rs. 42.92 billion for full-year FY26 and from Rs. 15.64 billion in FY25, representing a near 19-fold increase since FY21's Rs. 2.37 billion average. This deepening secondary market liquidity is a critical enabler for institutional adoption, narrowing bid-ask spreads and reducing the friction cost that has historically inhibited large ETF trades in India.
How Fast Is India's Passive Funds Industry Growing?
India's passive funds industry has expanded from Rs. 1.63 trillion in AUM at the end of FY20 to Rs. 13.73 trillion at the end of FY26, representing a CAGR of approximately 43% since FY20. Annual net inflows reached a record Rs. 2.07 trillion in FY26, more than double the FY25 figure of Rs. 1.42 trillion, reflecting the accelerating pace at which both institutional and retail investors are embracing passive strategies.
India Passive Funds, Annual AUM and Net Flows Trend
Bottomline
May 2026 highlights the resilience of India's passive funds industry despite short-term asset-class-specific headwinds. Although aggregate net flows turned negative, this was driven primarily by cyclical debt and commodity outflows, while equity passive funds continued to attract robust investor demand. Stable industry AUM, rising investor participation, and continued product launches reinforce that the long-term growth trajectory remains intact.
