Passive fund assets hit record Rs 15.15 lakh crore in July on steady inflows

Passive investment funds under management reached a record Rs 15.15 lakh crore in July 2026, according to data from the National Stock Exchange. The milestone was driven by consistent investor allocations rather than market appreciation, with the figure marginally surpassing the previous peak of Rs 15.02 lakh crore recorded in January 2026.

Between January and July 2026, passive funds absorbed net inflows exceeding Rs 90,461 crore. This resilience came despite headwinds such as geopolitical tensions, elevated crude prices, rupee depreciation, and episodes of foreign portfolio investor selling.

The NSE noted that passive funds attracted Rs 43,212 crore in net inflows during February and March, even as total AUM slipped to Rs 13.73 lakh crore by March due to valuation pressures. As conditions stabilised, continued inflows helped lift assets by nearly Rs 1.41 lakh crore from that trough, allowing the industry to reclaim and surpass its earlier peak.

A significant structural detail emerged from the data: 67 per cent of passive AUM, or Rs 10.11 lakh crore, is linked to stocks covered under SEBI's new Closing Auction Session (CAS) framework. Introduced on August 3, 2026, the CAS mechanism replaces the previous Volume Weighted Average Price (VWAP) method for determining official closing prices. Although the framework initially covers only 208 F&O-eligible stocks, the associated assets are substantial.

The concentration is particularly visible in exchange-traded funds (ETFs), where Rs 7.92 lakh crore of the Rs 8.04 lakh crore AUM is tied to CAS-eligible stocks. Equity index funds show a similar pattern, with around Rs 2.19 lakh crore of their Rs 2.40 lakh crore assets linked to these stocks.

The NSE also highlighted a shift in flow leadership during the March correction and subsequent rebound. Commodity ETFs led passive inflows initially, attracting Rs 33,503 crore in January alone—86 per cent of total passive inflows that month. However, their appeal waned as gold and silver prices moderated, with net inflows slipping to Rs 16,641 crore during February-July 2026.

Equity allocations provided an important cushion during the downturn. Amid the March correction, equity-oriented passive schemes absorbed Rs 30,237 crore even as overall passive AUM declined. Equities subsequently emerged as the major driver of asset formation, attracting Rs 50,096 crore in net inflows through April-July 2026 and lifting passive equity AUM from Rs 9.18 lakh crore to Rs 10.71 lakh crore.

This preference is also reflected in new product launches: 52 of the 68 passive schemes introduced between January and July 2026 were equity-oriented, underscoring a growing investor appetite for benchmark-led equity exposure. Overall, the NSE observed that passive growth in 2026 was driven less by market direction and more by the persistence of investor allocations, enabling the industry to absorb valuation-led drawdowns and return to record asset levels.