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Active funds may not beat index as most don't give remarkable returns

Active MFs' fees are 10-50 times the fees of the most actively traded Nifty50 ETF

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Mutual Funds

Avinash Luthria 

The active mutual fund (MF) industry keeps repeating the statement that ‘the average Indian active MF beats the index and delivers alpha’. And they use various deceptive arguments to support this statement.

These, however, are not borne out by data. The belief in the fairy tale of alpha is dangerous because it will tempt investors to save less for retirement; invest too much in equities believing that an active MF will partially insulate them against a significant stock market crash; be willing to pay a very high fee if an MF can make an exciting case about generating ...

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First Published: Sat, October 12 2019. 23:44 IST
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