How Mutual Funds Are Different from Index Funds: Which Is Better?

In early 2025, only about 26 percent of equity mutual funds performed better than their benchmarks. Large-cap funds, which invest in the biggest companies, did not perform better than the index at all in January.Mid-cap funds also lost their shine. Only 18 percent of them outperformed the benchmark in three, five, and ten-year periods ending in May 2025.

Passive funds, which include index funds and ETFs, showed strong growth during the same period. They now account for nearly 17 percent of India’s total mutual fund assets, which is a sharp jump from just a few years ago.