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Passive Funds Outshine Active Funds in 2025
22 Nov
Summary
- Passive funds delivered higher returns than active equity funds over the last year.
- Inflows into passive funds jumped multi-fold, while active funds saw a decline.
- Gold ETFs experienced a multi-fold increase in inflows and assets under management.
Passive funds have recently outperformed actively managed equity funds, a trend attributed to a strong market rally and a substantial increase in investment inflows. Over the last year, passive funds have seen their assets under management grow significantly, while actively managed funds experienced slower growth.
Inflows into passive funds have shown a multi-fold increase, contrasting with a decline in the figures for actively managed equity funds. This shift is partly due to heightened investor interest in gold and silver, as evidenced by the multi-fold rise in inflows and assets for Gold Exchange Traded Funds.
Experts suggest that rising market efficiency and regulatory changes have made it increasingly challenging for active managers to consistently generate alpha. However, some anticipate a shift as foreign investors return, potentially creating a more favorable environment for active strategies to narrow the performance gap.
