Abstract The transformation of global financial markets has significantly influenced investment behavior, particularly with the growing adoption of passive investment instruments such as Exchange-Traded Funds (ETFs). This study investigates the factors driving retail investor migration from actively managed mutual funds to ETFs, with specific reference to Pune. The research focuses on three critical determinants: cost efficiency, transparency, and performance. Primary data was collected from 250 retail investors using a structured questionnaire based on a five-point Likert scale. Statistical techniques including reliability analysis, exploratory factor analysis, multiple regression, and Structural Equation Modeling (SEM) were applied to examine relationships among variables. The findings reveal that cost efficiency and transparency are significant predictors of ETF adoption, while performance plays a comparatively moderate role. Behavioral biases negatively influence ETF adoption, indicating the persistence of traditional investment preferences. The study contributes to the literature on passive investing in emerging markets and provides practical implications for policymakers, financial advisors, and asset management companies.
Ajit Sambhaji Thite (Sat,) studied this question.