Active funds vs passive funds: Which is better?

Get definitive answer for large- and small-cap funds

Our criteria

We compared SIP returns of different categories over a 5 and 7-year period on a daily rolling basis of 10 years to see if active funds beat their benchmarks 65% of the time.

What we found for large-cap funds?

Passive funds perform better. Only 24% of active funds beat the large-cap index on a 7-year SIP in the last decade. Worse, only 19% beat the benchmark on a 5-year SIP.

What about small-cap funds?

Active funds do better in this case, as fund managers tend to spot undervalued stocks. Over a 5- and 7-year period, at least 85% of active small-cap funds beat their benchmarks.

How do other equity categories fare?

To check for mid-cap funds, flexi-cap funds, value funds, among others, we suggest you grab the latest Mutual Fund Insight edition. Our findings will surprise you.