A growing number of investors are shifting their investments away from actively managed equity schemes to exchange traded funds amid increasingly volatile markets, shows data released by the Association of Mutual Funds in India for the month of April.
April saw multiple geopolitical events trigger bouts of selling in markets, such as the announcement of Trump Tariffs, the Pahalgam attack, and India's precision strikes in Pakistan.
During notable market declines in 2024, such as the day of general elections, several investors had faced the issue of not being able to invest in index funds at their preferred net asset values or NAVs. This was even while orders were placed within the timeframe that would assure them of NAV allocation for that day.
For those looking to invest in markets with a longer term view, or those who view the decline as likely to reverse, getting the right price while making investments can be the deciding factor between index funds and ETFs.
In April, equity-focused ETFs saw significantly higher inflows than index funds. While both offer the same option to invest in benchmark indices, ETFs provide the added advantage of allowing investors to pick the exact price for their investments and exits.
Net inflows into ETFs (excluding gold ETFs) saw a 70% jump in April 2025, while net inflows into actively managed equity schemes fell for the second month in a row.
Away from the allure of stellar returns promised by actively managed equity schemes, passive schemes have been quietly growing in popularity.
Since markets' September peak, active equity schemes have seen 40 new fund offerings, while their passive counterpart saw more than double that at 91.
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