Passive Fund Flows Slowed in February 2026, but the Bigger Trend Still Looks Strong

Passive mutual funds saw net inflows of ₹13,879 crore in February 2026. That was much lower than January’s ₹39,955 crore, but the slowdown needs to be read carefully. The softer monthly number says more about a cooling in precious-metals enthusiasm than a weakening in passive adoption itself. The broader trend still points to strong expansion in passive participation across India’s mutual fund landscape.

That is why February should not be read as a setback for passive investing. One month of lower flows can look dramatic, especially after a surge-led month like January. But when you step back and look at folios and assets under management, the story remains much larger. Passive funds are no longer sitting at the edge of the market. They are becoming a more established part of how Indian investors allocate money.

Passive Fund Snapshot for February 2026

Passive Fund Flows Slowed in February 2026, but the Broader Growth Story Stayed Strong

The total passive fund inflow of ₹13,879 crore in February was a sharp step down from January, when inflows were boosted heavily by the rush into precious-metals ETFs. Passive fund AUM also eased to about ₹15.24 lakh crore in February from about ₹15.41 lakh crore in January, showing that the month was softer on both flows and mark-to-market value.

That monthly slowdown, however, should not be confused with a weak category. Passive funds still remained one of the stronger structural stories in the mutual fund industry. The February number looks more like a pause after an unusually hot phase than a break in trend. That distinction matters because passive categories are now being driven by more than one short-term theme.

Why Passive Funds Still Stood Out in FY26

The strongest support for passive funds comes from yearly growth, not from one monthly flow number.

Total passive fund folios stood at about 5.57 crore in February 2026, up 36.15% year-on-year. Total passive AUM stood at about ₹15.24 lakh crore, up 41.26% year-on-year. Those are big jumps for a category that, until a few years ago, was still seen as relatively limited in retail appeal.

Folio growth is especially important here. AUM can rise because markets rise. Folios tell you whether more investors are actually entering the category. On that front, passive funds had a very strong year. That is why FY26 can reasonably be seen as an important year for passive funds in India. Monthly flows may have been volatile, but investor participation clearly broadened.

Which Passive Categories Drove the February 2026 Flow Story

Gold ETFs remained the biggest flow driver in February with net inflows of about ₹5,255 crore. That still made gold the standout category for the month, even though it was far below January’s far more extreme pace. The cooling was sharp, but leadership remained with gold.

Beyond gold, domestic passive equity categories continued to show meaningful demand. Equity-oriented ETFs (Domestic) saw inflows of about ₹4,141 crore, while Equity Index Funds (Domestic) attracted about ₹3,146 crore. Debt-oriented ETFs added about ₹1,173 crore, and Debt Index Funds (Ex-TMIF) brought in about ₹960 crore. This is important because it shows February was not only a metals-led passive month. Broader passive equity and debt categories continued to gather money as well.

There were weak spots too. Silver ETF flows turned negative at about -₹826 crore, while Debt Index Funds (TMIF) saw outflows of about -₹907 crore. Among overseas categories, FOFs in overseas active funds still saw positive inflows, while FOFs in overseas passive funds remained in the red. That points to a more selective flow pattern once the January metals frenzy cooled.

Folio Growth Shows Where Retail Participation Was Strongest

If flows tell you where money moved in a month, folios tell you where retail behaviour changed over time.

The strongest year-on-year folio growth came from Silver ETFs, up about 746.06%. Gold ETFs rose 76.93%, while Debt Index Funds (Ex-TMIF) rose 76.12%. International equity-oriented ETFs were up 47.29%, and FOFs in overseas active funds grew 55.77%.

This tells us two things. First, gold and silver clearly brought in a wave of investor participation. Second, passive adoption was not restricted to metals alone. Index-linked equity categories, debt passive products, and overseas-linked categories also saw broader investor expansion. That points to a category that is widening in retail relevance, not narrowing into one tactical trade.

AUM Growth Tells a Slightly Different Story

AUM growth confirms the strength of passive funds, but it needs to be interpreted with more care than folios.

The biggest AUM jumps came from Silver ETFs, where AUM rose about 557.23% year-on-year, and Gold ETFs, where AUM rose about 229.26%. These numbers were influenced not only by inflows but also by the strong price performance of precious metals over the past year.

But the AUM story was not limited to metals. FOFs in overseas active funds saw AUM growth of about 61.85%. Domestic Equity Index Funds grew about 41.10%, and Domestic Equity-oriented ETFs grew about 27.49%. That spread is important. It shows that passive AUM growth was broader than just gold and silver price appreciation. Equity indexing and ETF participation also built meaningful scale.

Was This Only a Gold and Silver Story? Not Quite

Gold and silver clearly played a major role in making passive funds more visible in FY26. That part is hard to miss. Gold ETF inflows led February, and metals-linked folio and AUM growth were among the strongest in the passive universe.

But reducing the whole passive story to metals would miss the bigger shift. Domestic equity index funds and domestic equity ETFs also showed strong flows, strong participation, and meaningful AUM growth. That suggests investors are increasingly using passive products not just for tactical commodity exposure, but also for simple, lower-cost access to equity markets. In volatile conditions, indexing appears to be gaining more acceptance as a core allocation route.

What February 2026 Passive Data Says About Investor Behaviour

A few things stand out clearly from the February data.

First, monthly passive flows can cool sharply without damaging the bigger trend. Second, investor participation in passive products is now much broader than before. Third, precious-metals ETFs remain important, but they are no longer the only reason passive funds look strong. Fourth, passive equity appears to be gaining deeper acceptance among Indian investors, especially in periods when broad exposure, cost control, and simplicity become more valuable.

So the February message is straightforward. Passive flows tapered, but passive adoption did not. The monthly frenzy cooled. The structural trend still looks intact.

Key Takeaways

• Passive fund inflows stood at ₹13,879 crore in February 2026, sharply lower than January’s ₹39,955 crore.
• The monthly slowdown was largely due to cooling in precious-metals enthusiasm, especially after January’s unusually high flows.
• Total passive fund folios rose to about 5.57 crore, up 36.15% year-on-year.
• Total passive fund AUM stood at about ₹15.24 lakh crore, up 41.26% year-on-year.
• Gold ETF remained the biggest flow category in February, while Silver ETF flows turned negative.
• Domestic passive equity categories still attracted meaningful money through index funds and ETFs.
• The February data suggests passive investing in India is broader than just a gold-and-silver trade.

FAQs

1. Did passive fund flows slow down in February 2026?

Yes. Passive fund inflows fell to ₹13,879 crore in February 2026 from ₹39,955 crore in January.

2. Why are passive funds still looking strong despite lower monthly inflows?

Because yearly folio growth and AUM growth remain strong. The monthly slowdown did not change the broader adoption trend.

3. Which passive categories led February 2026 flows?

Gold ETFs led the month, followed by domestic equity-oriented ETFs and domestic equity index funds.

4. Did silver ETF flows turn negative in February 2026?

Yes. Silver ETF net flows were negative in February 2026.

5. Is passive investing becoming mainstream in India?

The folio and AUM growth trend suggests that passive investing is gaining much wider acceptance, especially across equity indexing and ETF-based exposure.

Disclaimer: This article is for general information and educational purposes only. It does not constitute investment, tax, legal, or financial advice. Mutual fund data, flows, and AUM can change from month to month. Please refer to official sources or speak to a qualified professional before taking action.