Passive funds can make managers deliver better value: Tim Edwards, S&P Dow

"Historically, Indian investors have shown a very strong home bias - investing all or nearly all of their capital, domestically," says Edwards

Index-based investing is gaining currency in India. Tim Edwards, managing director, Index Investment Strategy, S&P Dow Jones, an index provider, discusses various trends around index management with Samie Modak. Edited excerpts:

Why are actively-managed funds finding it challenging to beat indices such as the Sensex?

In India, we observe the same shortfalls in active manager performance and unique local factors, which can be attributed to three sources: the typically higher cost of active management, increased professionalisation in equity market participants, and the skewness of stock returns.

Over the long term, it has historically been the case that a select few