Why Choosing Between Active And Passive Funds May Be The Wrong Question

Beyond the need for patience, there is a crucial analytical nuance often missed. When you look at the actual money invested – tracking how the bulk of investor capital is performing rather than just counting the number of funds – a more nuanced picture emerges. The SPIVA Year-End 2025 scorecard provides a recent example. In CY2025, the S&P India LargeMidCap index climbed 8.9%. If you simply average the performance of all Indian Equity Large-Cap funds (on equal-weighted basis), the return was 7.3%. However, when weighted by the actual assets they manage, these funds delivered 9.4% at an aggregate. This highlights an important dynamic: the larger, established active funds where the majority of investor wealth resides delivered stronger aggregate returns than the simple average of their peers. Active management, anchored by robust research and disciplined portfolio construction, continues to be a meaningful force in India.