As elsewhere, passive funds are becoming more predominant in India. Over 20% of domestic MF assets under management (AUM) and 30% of FPI AUM are estimated to now be contributed by passives (index and ETFs). In the US, they are already at 55%, and their share is growing.
For passive investors who benchmark themselves to the official closing price, the absence of a closing auction resulted in tracking error and execution challenges. Closing auction session (CAS) is an important parameter in most benchmarks, and almost every major market has one. So, questions on the transition to CAS are not a question of ‘if’ but ‘how’.
