New Delhi, March 4 -- Asset management companies (AMCs) may double down and innovate more on passive products following the revision of mutual fund categorization norms, offering investors a wider choice of investment options.

Passive funds typically track indexes and don't require active management. While passive funds have been growing steadily in India, the new cap on portfolio overlap may catalyze greater innovation in such products and their growth.

"The restrictions on portfolio overlap can be a trigger for passive investments. Mutual funds may look at creating differentiated products in passives and improve innovation in the space," said Archit Doshi, senior vice president at Prabhudas Lilladher Capital Group.

As fund houses sta...