A Study on Mutual Fund Performance: Analyzing Index Funds vs. Actively Managed Funds in the Indian Market
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A Study on Mutual Fund Performance: Analyzing Index Funds vs. Actively Managed Funds in the Indian Market
Authors:
Aditya Rai, Student, Amity Business School, Amity University Chhattisgarh, aditya.rai5@s.amity.edu
Dr. Gazala Yasmin Ashraf, Professor and Head, Amity Business School, Amity University Chhattisgarh, gyashraf@rpr.amity.edu
Abstract
This study presents a comparative analysis of actively managed mutual funds and index (passive) funds within the Indian financial landscape. The research evaluates ten selected funds—five active and five passive—spanning a five-year period (January 2020 to December 2024). The objective was to assess these funds across key parameters including compound annual growth rate (CAGR), standard deviation, Sharpe Ratio, Alpha, Beta, expense ratio, and tracking error. The analysis indicates that passive funds, owing to their lower costs and consistent benchmark tracking, offer better risk-adjusted returns for long-term investors. While select active funds have shown potential to generate alpha, their inconsistent performance and higher expense ratios undermine their reliability. The findings advocate for a core-satellite approach, where passive funds form the investment core, supplemented by high-conviction active funds.
Keywords: Mutual fund performance, index funds, active funds, risk-adjusted returns, Indian equity market, Sharpe ratio, alpha generation
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