Active Versus Passive Equity Fund Mangement in India

Abstract

The study examined the performance of the active and passive equity mutual funds using risk adjusted measures like Sharpe ratio, Treynor ratio and Jensen Measure to know whether actively managed equity mutual funds collecting higher fees and promising higher returns outperform the passively managed funds based on the index in India. There is strong evidence that actively managed equity mutual funds are generating superior returns than passively managed funds. It is found that 6 out 10 active equity mutual fund categories have shown statistically significant returns than passive equity mutual funds using Sharpe, Treynor risk adjusted performance measures and 9 out of 10 using Jensen measure.