Active Fund vs Index Fund

Does an active fund's extra return beat its extra cost?

Monthly SIP

₹

₹0₹5 L

Lumpsum invested today

₹

₹0₹5 Cr

Index return (p.a.)

1%25%

Active fund's outperformance before fees

-5%10%

Index fund expense ratio

0%1.5%

Active fund expense ratio

0%2.5%

Time period

yrs

1 yr40 yrs

Index fund value: ₹49,50,217
Active fund value: ₹50,94,335
Active fund ahead by: ₹1,44,119
Break-even outperformance: 0.7%

SPIVA India scorecards have found that most active large-cap funds trail their benchmark over 10 years.

How it works

An index fund charges very little but only matches the index. An active fund charges more and has to beat the index by more than that difference just to break even. Enter the outperformance you expect after costs are stripped out.

For education only. Returns are assumptions, not guarantees.

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