India's Passive Debt Funds: Climbing Against Constraints

Passive debt funds in India have rapidly evolved from a niche product into a meaningful part of India’s fixed-income market, with assets under management surging from INR 0.67 billion in 2015 to over INR 2 trillion by mid-2025, now nearly one-fifth of the debt fund space. The shift was accelerated by credit events in 2018–20 that pushed investors toward safer, transparent structures like Target Maturity Funds and ETFs, with institutional players such as EPFO playing a pivotal role in adoption. Despite this progress, India still lags global peers, reflecting both growth potential and structural hurdles.

Morningstar’s latest report explores the rise of passive debt funds, the factors driving adoption, the challenges ahead, and when investors may be better served by passive strategies versus active ones.

Download the report to know more.