Active vs passive small-cap mutual funds: How wide is one-year return gap? Don't assume index schemes always lag
AI Summary
The stark contrast in returns between active and passive small-cap funds highlights the potential benefits of active management in volatile markets. Retail investors should consider their risk tolerance and investment strategy when choosing between these options, as the significant outperformance of the Trust MF Small Cap Fund suggests that skilled fund management can lead to substantial gains. However, the consistent performance of passive funds indicates a reliable, lower-risk approach for those who prefer to track market indices closely.
Small-cap funds are equity mutual funds that are required to invest at least 65% of their assets in small-cap stocks. But these are the rules for active small-cap funds, wherein the fund manager has the flexibility to select stocks and build the portfolio based on the scheme’s investment strategy.
There are also passive small-cap funds, which track an underlying index and seek to replicate its portfolio. According to the rules, index funds or ETFs have to invest at least 95% of their assets in the securities of the underlying index.
Original Article
Published on Livemint
Frequently Asked Questions
What is this article about?
This is a results news update from Livemint, published on 25 September 2026.
Is this news positive or negative for markets?
TopFund's automated sentiment analysis reads this article as neutral in tone, based on the language used in the report. This is a general signal, not investment advice.
Where can I read the full article?
The full article is available at the original source, Livemint — see the "Read Original Article" link on this page.