Active large caps vs index funds: 22 of 27 won on 5 years

The count

Over the five years to 16 June 2026, 22 of 27 active large-cap funds returned more than the median Nifty 50 index fund. That index fund returned 9.71% a year; the median active fund returned 11.51%.

This is a comparison of what investors actually received. Both sides are Direct plans, Growth option, measured from their own daily NAVs, so both are after their costs. Returns of one year or more are compounded annual rates.

The yardstick

We took every index fund in the Index Funds category that tracks the plain Nifty 50 or Nifty 100, and left out equal-weight, value, quality and other factor versions, and an ELSS index fund with a lock-in. That leaves 26 Nifty 50 funds and 3 Nifty 100 funds, though many are too young for a long record.

The index funds sit close together. Leave out Taurus Nifty 50 Index, the weakest over one, three and five years, and every Nifty 50 fund is within 0.3 points a year of every other over three and five years.

The median index fund trails our estimate of the index by 0.42 to 0.52 points a year, depending on the period. That gap covers the funds' running costs and tracking error, plus any error in our estimate.

Period by period

The median active fund was ahead of the median Nifty 50 index fund by 2.07 points over one year, 2.71 points a year over three, 1.80 over five and 0.70 over ten. The margin narrows as the window lengthens, but it does not turn negative.

The Nifty 100 is the tougher yardstick, and it is the one SEBI sets for the category. Against the median Nifty 100 index fund, the active median's lead over three years falls to 1.19 points a year. Only one Nifty 100 index fund, Axis Nifty 100 Index, has a five-year record, and none has ten.

The funds that lost to every index fund

A few active funds did worse than even the weakest Nifty 50 index fund.

Over five years, Axis, PGIM India and LIC MF returned less than every Nifty 50 index fund. Over ten years, PGIM India, LIC MF, Franklin India and Taurus did. Axis Large Cap is below every index fund over five years but above all of them over ten.

At the other end, Nippon India Large Cap returned 15.95% a year over five years, 6.24 points a year more than the median index fund.

What this does not tell you

Only survivors are counted. Active funds that were merged or closed over these periods are missing, and they were rarely the winners. The true hit rate is likely lower than these counts.

The recent year flatters active funds. Over the past year the Nifty 50 lagged the Nifty 100 by about 1.8 points (our estimates: −2.58% against −0.76%), and active large-cap funds can hold companies outside the Nifty 50. That helps the short-period counts more than the ten-year one.

Picking the winners in advance is a different question. These counts say how many active funds beat the index funds, not whether anyone could have known which ones. Nothing here is advice to buy or sell any fund.

Where to go from here

Every index fund is on the index fund page, and the index funds that track screen lists those with tracking error under 0.5%. Every active fund is on the large-cap fund page.

For the background, read active vs passive investing and index funds and ETFs. How far Nifty 50 funds drift from their index is in Nifty 50 index fund tracking difference, and the full spread of active large caps is in large-cap fund returns in March.