Date:- 15-05-2026

Content

The Indian mutual fund industry offers both active and passive investment avenues; however, historical data indicates that active mutual funds have generated meaningful alpha across several equity categories.

The analysis shows that actively managed fund schemes have, in many cases, outperformed benchmark indices by nearly 2%-4% over longer investment horizons . Mid Cap and Small Cap funds, in particular, have demonstrated stronger alpha generation, reflecting the effectiveness of active management in less efficient market segments.

The study also reinforces that even moderate but consistent alpha can create significant long-term wealth creation through compounding . While both active and passive strategies have their place in portfolio construction, historical data suggests that active fund management has demonstrated the potential to outperform benchmarks across multiple categories and time periods.

COMPARATIVE PERFORMANCE ANALYSIS: ACTIVE MUTUAL FUND SCHEMES VS. BENCHMARK INDICES (TRI)

Passive investing aims to replicate benchmark index returns, while active investing seeks to outperform them. Since index-tracking schemes can only closely match the benchmark before expenses and tracking error, benchmark TRI returns have been used as the reference point for passive investing in this analysis. Data is as of May 6, 2026. Benchmark index data has been sourced from the NSE India website, while mutual fund performance data has been sourced from Moneycontrol Website.The analysis considers the top 5 and top 10 performing mutual fund schemes across respective time periods for calculating average scheme performance. N/A indicates that the relevant data was not available. While reasonable care has been taken to ensure accuracy, no responsibility is accepted for any errors or omissions. This analysis is for informational and comparative purposes only and should not be construed as investment advice.

KEY INSIGHTS

• Active schemes have delivered higher returns than benchmarks in many categories. Across Large Cap, Flexi Cap, Mid Cap, Small Cap, Value, Focused, ELSS, and Large & Mid Cap, the top active schemes usually sit above the benchmark CAGR across most periods.

• The return gap is often meaningful, Not Minor. In several categories, the difference between active funds and their benchmarks ranges from approximately 2% to 4% , which can materially impact long-term wealth creation. The data suggests that active investing has the potential to generate both market returns and alpha.

• Passive investing may still remain suitable for investors seeking lower costs, simplicity, and benchmark-linked returns.But investors shall be aware of the fact that Long-term impact of excess return is far greater than it appears in a single year. Over long investment horizons, even a modest annual outperformance can create substantial wealth through the power of compounding over 15 to 30 years.

• The strongest results appear in categories where market inefficiencies are usually higher, such as mid cap and small cap. That is where active managers seem to have had the most room to add value.

DISCLAIMER: Equity investments are subject to market risks. Past performance is not a guarantee of future results. This analysis does not constitute professional investment advice or a recommendation to buy or sell any security. Investors should conduct their own research or consult with a certified financial advisor before making any investment decisions. While reasonable care has been taken to ensure accuracy, no responsibility is accepted for any errors or omissions.