Advanced International Journal for Research

E-ISSN: 3048-7641   •   Impact Factor: 9.11

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Passive vs Active Investing: A Comparative Study on Risk-Adjusted Returns of Mutual Funds in the Indian Market

Author(s) Mr. DHRUV MISTRY, Mr. SOMESH TIWARI, Ms. ANUSHKA DAS MAJUMDER, Ms. KOMAL KUMARI
Country India
Abstract This study presents a comparative analysis of active and passive investment strategies in the Indian mutual fund market with emphasis on risk-adjusted returns. Using secondary data from selected actively managed equity mutual funds and passive index funds tracking benchmark indices, the research evaluates performance through key metrics such as Sharpe ratio, Treynor ratio, Jensen’s alpha, standard deviation, beta, and compound annual growth rate (CAGR). Cost factors including expense ratios are also examined to assess their impact on fund performance. The analysis indicates that while actively managed funds demonstrate the potential to generate excess returns, they are associated with higher costs and greater volatility. In contrast, passive funds provide market-linked returns with lower expenses and relatively stable risk profiles. The study highlights the trade-off between return generation and cost efficiency and concludes that the choice between active and passive investing should align with an investor’s risk tolerance, investment horizon, and financial objectives. The findings offer valuable insights for investors, portfolio managers, and financial analysts operating in the Indian capital market.
Keywords Active Mutual Funds, Passive Mutual Funds, Risk-Adjusted Returns, Sharpe Ratio, Index Funds, NIFTY 50, Investment Strategy, Indian Capital Market
Field Sociology > Banking / Finance
Published In Volume 7, Issue 2, March-April 2026
Published On 2026-04-25
DOI https://doi.org/10.63363/aijfr.2026.v07i02.5285
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