Gen Z And Millennials Preferring Index Funds Over Etfs: Motilal Oswal

11/20/2024 5:00:43 AM

(MENAFN- Live Mint) New Delhi [India], November 20 (ANI): India's investment ecosystem is undergoing a seismic shift, with index investing gaining unprecedented traction among investors, says a report by Motilal Oswal.

The younger generation, including Gen Z and Millennials, shows a stronger inclination towards index funds as compared to older investors. They also prefer Index funds over ETFs for better returns and easy liquidity.

While 46 per cent of younger investors favour index funds, only 35 per cent of Gen X and Boomers do so. Millennials and Gen X investors also exhibit a notable interest in Factor or Smart Beta Funds, reflecting their appetite for innovative investment strategies.

Passive funds have become a core component of investor portfolios, with 80 per cent of investors increasing their allocation to these funds in 2024, compared to 53 per cent last year.

The survey also noted a growing popularity of ETFs, with 57 per cent of respondents investing in them, up from 41 per cent in 2023. Of these, 26 per cent invest solely in ETFs, while 31 per cent have diversified between ETFs and index funds.

This rising preference is matched by a commitment to long-term investment. A significant 81 per cent of investors plan to hold their passive investments for over three years, highlighting sustained confidence in the growth potential of these funds.

Sectoral indices like Nifty IT and Nifty Bank dominate as the top choice for passive fund investors, selected by 67 per cent of respondents. Benchmark indices such as the Nifty 50 and Nifty 500 follow closely, preferred by 61 per cent of investors.

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