Active vs Passive Mutual Funds Performance in India : A Systematic Review

Authors

DOI:

https://doi.org/10.17010/ijrcm/2026/v13i1/176055

Keywords:

Indian mutual funds, active vs passive investing, risk-adjusted returns, performance persistence, mutual fund performance, investment style consistency.
JEL Classification Codes : G11, G12, G14, G23
Publishing Chronology: Paper Submission Date : January 24, 2026 ; Paper sent back for Revision : February 20, 2026 ; Paper Acceptance Date : March 20, 2026

Abstract

Purpose : This systematic review presented the performance of active and passive mutual funds in the Indian market by collating existing literature to clarify the inconsistencies and gaps as the industry expanded from ` 47,000 crore to ` 80.80 lakh crore in assets under management by 2025.

Methodology : This systematic review followed the PRISMA protocol and searched the Scopus and Google Scholar databases for articles published between 2010 and 2025. Of the 110 articles identified, 44 were selected for this review, including peer-reviewed journals, dissertations, and industry reports. The findings were grouped into fund categories, performance measures, and timeframes. The methodologies used were evaluated for their overall quality.

Findings : Active funds reported modest gains on a risk-adjusted basis, with large-cap funds incurring higher costs that eroded the gross alpha. Consistency of investment style with fund performance was evident, while the analysis of persistence indicated lower durability of outperformance. The post-COVID findings favored passive funds in various categories.

Practical Implications : Asset managers were advised to focus on a disciplined style, while financial advisors could consider core passive and satellite active portfolios for investors investing through SIP routes every month.

Originality : The paper is the first systematic literature review in compliance with PRISMA standards that synthesizes pre 2020 findings of parity between active and passive funds with post-COVID findings of the preponderance of passive funds. Major gaps were identified in long-term performance persistence, tax-adjusted performance, ESG/factors funds’ performance evaluation, and the need for comprehensive studies covering the 2010–2025 period.

Downloads

Download data is not yet available.

Downloads

Published

2026-06-15

How to Cite

P, R., & Tripathi, N. (2026). Active vs Passive Mutual Funds Performance in India : A Systematic Review. Indian Journal of Research in Capital Markets, 13(1), 8–26. https://doi.org/10.17010/ijrcm/2026/v13i1/176055

Issue

Volume 13, Issue 1, January-June 2026

Section

Articles
Crossref
Scopus
Google Scholar
Europe PMC

References

1) Annapurna, R., & Basri, S. (2024). Role of emotions in stock investment decisions: A critical review of the literature. Indian Journal of Finance, 18(5), 50–65. https://doi.org/10.17010/ijf/2024/v18i5/173842

2) Das, S. K., Das, S., & Seth, S. (2023). Performance of mutual funds in India: A study with reference to select equity multi-cap funds. Management Journal for Advanced Research, 3(1), 8–14. https://doi.org/10.54741/mjar.3.1.2

3) Deb, S. G. (2019). Persistence in performance of actively managed equity mutual funds: New Indian evidence. IIMB Management Review, 31(2), 145–156. https://doi.org/10.1016/j.iimb.2019.03.014

4) Engberg, G., & Bernhardtz, N. (2024). Comparative performance: Analysis of active and passive fund management in emerging and developed markets (Doctoral dissertation, University of Gothenburg). GUPEA. https://gupea.ub.gu.se/handle/2077/82228

5) Ganti, A. R., & Jain, S. (2018). A glimpse of the future: India's potential in passive investing. S&P Dow Jones Indices. https://www.spglobal.com/spdji/en/

6) Gopane, T. J., Moyo, N. T., & Setaka, L. F. (2024). Emerging market analysis of passive and active investing under bear and bull market conditions. Journal of Capital Markets Studies, 8(1), 6–24. https://doi.org/10.1108/JCMS-03-2023-0008

7) Hada, B. S., Suri, A. K., & Jha, B. (2016). A critical analysis of performance of active and passive investment strategy of Indian mutual fund schemes. European Journal of Economics, Finance and Administrative Sciences, 88, 36–45. https://www.researchgate.net/publication/321244190

8) Jain, S. (2012). Analysis of equity based mutual funds in India. IOSR Journal of Business and Management, 2(1), 1–4. https://doi.org/10.9790/487X-0210104

9) Jeyaprakash, R. A., Balasubramanian, S. A., & Maddikera, V. (2025). An empirical study on mutual fund factor-risk-shifting and its intensity on Indian equity mutual funds. arXiv. https://doi.org/10.48550/arXiv.2510.19619

10) Kale, J. R., & Panchapagesan, V. (2012). Indian mutual fund industry: Opportunities and challenges. IIMB Management Review, 24(4), 245–258. https://doi.org/10.1016/j.iimb.2012.05.004

11) Krishnamoorthi, M., & Murugesan, T. K. (2018). Analysis of risk and return of selected mutual fund schemes in India. International Journal of Mechanical and Production Engineering Research and Development, 8(3), 884–889. https://www.researchgate.net/publication/332267486

12) Krishnamurthy, J., & Singh, S. P. (2024). Did Indian equity mutual funds use derivatives to hedge their exposure during COVID? Indian Journal of Research in Capital Markets, 11(4), 61–73. https://doi.org/10.17010/ijrcm/2024/v11i4/174728

13) Kundu, D. (2025). Mutual funds in India: Features, growth, and contributions in the financial market. International Journal of Commerce and Management Studies, 10(2), 7–12. https://www.researchgate.net/publication/392694942

14) Maheen, M. S. (2021). Impact of COVID-19 on the performance of emerging market mutual funds: Evidence from India. Future Business Journal, 7(1), Article no. 37. https://doi.org/10.1186/s43093-021-00081-w

15) Malhotra, P., & Sinha, P. (2022). Top-bottom investing skill and the fund alpha in Indian mutual fund industry: An empirical investigation. IIM Ranchi Journal of Management Studies, 1(1), 4–20. https://doi.org/10.1108/IRJMS-06-2021-0015

16) Mohan, D. M., Rao, D. M., Chakravarthi, D. P., & Rao, P. N. (2021). Risk & return analysis with performance evaluation of selected mutual fund schemes: An empirical study. International Journal of Aquatic Science, 12(2), 2676–2692.

17) Mohanti, D., & Priyan, P. K. (2018). Style-exposure analysis of large-cap equity mutual funds in India. IIMB Management Review, 30(3), 219–228. https://doi.org/10.1016/j.iimb.2018.01.010

18) Mounir, A. (2024). Does Markowitz's mean–variance model matter during turmoil periods? Lessons from the COVID crisis. Indian Journal of Finance, 18(1), 29–41. https://doi.org/10.17010/ijf/2024/v18i1/171339

19) Muruganandan, S. (2013). Performance persistence of Indian fund of mutual funds: With special reference to bull and bear market. SSRN. https://doi.org/10.2139/ssrn.2354296

20) Page, M. J., McKenzie, J. E., Bossuyt, P. M., Boutron, I., Hoffmann, T. C., Mulrow, C. D., Shamseer, L., Tetzlaff, J. M., Akl, E. A., Brennan, S. E., Chou, R., Glanville, J., Grimshaw, J. M., Hróbjártsson, A., Lalu, M. M., Li, T., Loder, E. W., Mayo-Wilson, E., McDonald, S., … Moher, D. (2021). The PRISMA 2020 statement: An updated guideline for reporting systematic reviews. BMJ, 372, n71. https://doi.org/10.1136/bmj.n71

21) Pal, S., & Chandani, A. (2014). A critical analysis of selected mutual funds in India. Procedia Economics and Finance, 11, 481–494. https://doi.org/10.1016/S2212-5671(14)00214-7

22) Pandow, B. A. (2017). Performance of mutual funds in India. SSRN. https://doi.org/10.2139/ssrn.2925049

23) Pandow, B. A., & Butt, K. A. (2017). Risk and return analysis of mutual fund industry in India. Journal of Banking and Financial Dynamics, 1, 54–65. https://doi.org/10.20448/journal.525.2017.11.54.65

24) Patel, M., Gupta, S. D., & Madhavan, V. (2023). Investment style consistency and performance of Indian fixed income mutual funds. IIMB Management Review, 35(3), 229–239. https://doi.org/10.1016/j.iimb.2023.07.002

25) Rai, A., & Ashraf, G. Y. (2025). A study on mutual fund performance: Analyzing index funds vs. actively managed funds in the Indian market. International Scientific Journal of Engineering and Management, 4(6), 1–10. https://doi.org/10.55041/ISJEM04308

26) Rai, P., & Shekhar, C. (2025). A study on the comparison of mutual fund schemes in India. SSRN. https://doi.org/10.2139/ssrn.5159986

27) Rerksudsan, T. (2023). Financial performance comparison: Does ESG play a role in active and passive mutual funds? (Doctoral dissertation, Thammasat University).

28) Shreekant, G., Rai, R. S., Raman, T. V., & Bhardwaj, G. N. (2020). Performance evaluation of actively managed and passive (index) mutual funds in India. International Journal of Management, 11(12), 1138–1147. https://doi.org/10.34218/IJM.11.12.2020.104

29) Siddiqui, S. A., & Daniel, D. (2023). Measuring the efficiency of index funds: Evidence from India. Applied Finance Letters, 11, 109–121. https://doi.org/10.24135/afl.v11i.593

30) Singh, S., Bahl, S., Sharma, J., & Sharma, A. (2023). Performance evaluation of ESG mutual funds in India. Journal of Survey in Fisheries Sciences, 10(3S), 1133–1143. https://www.researchgate.net/publication/369926108

31) Soni, T. K. (2023). ESG score and mutual fund performance: Empirical evidence from India. Indian Journal of Finance, 17(3), 37–49. https://doi.org/10.17010/ijf/2023/v17i3/172671

32) Veeravel, V. (2024). Short-term persistence performance of equity mutual fund returns: Evidence from India. Copernican Journal of Finance & Accounting, 12(3), 79–92. https://doi.org/10.12775/CJFA.2023.017

33) Virparia, V. (2022). Performance analysis of mutual funds in India. International Journal of Management, Public Policy and Research, 1(3), 22–34. https://doi.org/10.55829/ijmpr.v1i3.57

34) Vörös, B., Di Gioia, D., Chapman, F., & Didio, N. (2025). SPIVA® India Year-End 2024. S&P Global. https://www.spglobal.com/spdji/en/spiva/article/spiva-india-year-end-2024/

35) Yadav, A. P., & Yadav, R. K. (2024). Impact of COVID-19 pandemic on mutual fund flows: Evidence from the Indian mutual fund industry. Indian Journal of Research in Capital Markets, 11(4), 8–24. https://doi.org/10.17010/ijrcm/2024/v11i4/174724