Finance
Active mutual funds vs index funds: the 2026 verdict
Why 80% of active funds underperform their index, and when active still wins.
The data
Over 10 years (2015–2025), Indian large-cap active funds underperformed Nifty 50 ~75% of the time after fees.
Mid-cap and small-cap: active still beats index ~55% of the time. Smaller market = more inefficiency.
When to choose index
- Large-cap allocation
- Anyone uncomfortable picking active managers
- Tax-efficient (lower turnover)
When active makes sense
- Mid-cap & small-cap
- Thematic / sectoral bets
- You have conviction in a specific manager
Recommended portfolio
60% index (Nifty 50) + 20% mid-cap active + 20% international ETF.
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