“ADOPTION AND GROWTH OF PASSIVE INVESTING: A STUDY ON INVESTOR AWARENESS AND PREFERENCE FOR INDEX FUNDS”

Abstract

In recent years, passive investing via index funds and ETFs has gained significant traction in Indian financial markets. This study examines retail investors’ awareness, preferences, and perceptions of passive investment strategies, emphasizing cost-effectiveness, market performance, risk, and accessibility as key motivators driving their adoption over actively managed funds. Using a descriptive research design, we combine secondary market data with survey responses from Indian retail investors. Analysis reveals that lower expense ratios, consistent long-term returns, and greater transparency are the main drivers of preference, while limited financial literacy, restricted access to products, and misconceptions about performance remain significant barriers. The findings provide actionable insights for asset management firms, financial advisors, and policymakers to enhance investor education and expand index fund adoption in India.

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