Active vs passive funds: Choose passive for core, active for satellite

Active funds can outperform, but also carry the risk of underperformance

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Higher expense ratios compared to passive funds can erode returns, while switching due to underperformance can trigger capital gains tax. (Photo: Shutterstock)

Himali Patel

4 min read Last Updated : Aug 04 2025 | 5:00 PM IST

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Mutual fund (MF) houses have launched over 100 passive funds in 2025, far surpassing active fund launches. Passive funds now account for around 17 per cent of total assets under management. With Jio BlackRock MF entering the space—five of its new fund offers (NFOs) opening for subscription on Tuesday (August 5)—the passive segment is set to get a boost.

Active Funds Can Deliver Alpha…

Experienced fund managers can capitalise on market opportunities. “Fund managers can move in and out of sectors, stocks, or themes based on market opportunities,” says Abhishek Tiwari, executive director and chief business officer, PGIM

Topics : Stock Market Mutual Funds Markets Investment