Index Fund vs Active Fund in India: How Many Large-Cap Funds Really Beat the Nifty Over 5 and 10 Years? Index funds have become the default advice for Indian investors: buy the Nifty, keep costs low, and stop trying to…
Index Fund vs Active Fund in India: How Many Large-Cap Funds Really Beat the Nifty Over 5 and 10 Years?
Index funds have become the default advice for Indian investors: buy the Nifty, keep costs low, and stop trying to pick winners. Fund houses argue the opposite: a good manager can beat the index. Both sides quote numbers. So I checked the index fund vs active fund question directly, using the NAVs of every large-cap fund in India with enough history.
I compared each active large-cap fund with what you could actually have bought instead: a Nifty 50 index fund, costs included. I then checked the result against S&P's SPIVA scorecard, which fixes some of the biases in a simple comparison like mine.
Quick answer
- Over 10 years to August 2026, 10 of 15 active large-cap funds beat a Nifty 50 index fund in their direct plans, but only 6 of 15 in their regular plans, which is how most people own them.
- The typical winner's margin was small: the median direct plan beat the index fund by 0.49% a year over 10 years; the median regular plan trailed by 0.30%.
- Over the last 3 and 5 years, most active funds won. A big reason: the wider Nifty 100 beat the Nifty 50 by 1.8% a year over 3 years, and large-cap funds can hold that wider market.
- Winners don't stay winners. The best large-cap fund of 2016–2021 ranked 13th of 15 in 2021–2026. Only 3 of 15 funds beat the index fund in both five-year halves.
- S&P's SPIVA scorecard, which counts closed and merged funds, found 74% of large-cap funds behind their benchmark over 10 years and 85% over 5 years.
In this article
Index fund vs active fund: what the data shows
I took every large-cap scheme listed by AMFI and pulled its daily NAV history. 18 funds had at least three years of history, and 15 had ten. For each, I calculated the yearly return to 31 August 2026 and compared it with the UTI Nifty 50 Index Fund, one of the oldest Nifty index funds, in the same plan type.
| Period to Aug 2026 | Funds | Direct plans that beat | Beat by 1%+ a year | Regular plans that beat | Beat by 1%+ a year |
|---|---|---|---|---|---|
| 3 years | 18 | 18 (100%) | 16 | 15 (83%) | 13 |
| 5 years | 18 | 16 (89%) | 14 | 13 (72%) | 10 |
| 10 years | 15 | 10 (67%) | 6 | 6 (40%) | 1 |
Share of active large-cap funds whose return beat the UTI Nifty 50 Index Fund in the same plan type. Source: AMFI NAVs via mfapi.in, to 31 August 2026.
The headline depends on which plan you look at. In direct plans, active funds did well: 10 of 15 beat the index fund over 10 years. In regular plans, which pay a commission to distributors, only 6 of 15 did, and just 1 by more than 1% a year. The roughly 0.8–1% extra cost of a regular plan wipes out most of the edge. Our post on Direct vs regular mutual funds measures that cost in detail.
Every large-cap fund with 10 years of history
Here's every large-cap fund with 10 years of history. These are examples from historical data, not recommendations.
| Fund (direct plan) | 10-year return a year | vs index fund | Regular plan, 10 years | Regular vs index fund |
|---|---|---|---|---|
| Invesco India Large Cap Fund | 14.0% | +2.31 | 12.3% | +0.76 |
| ICICI Prudential Large Cap Fund | 13.7% | +2.01 | 12.9% | +1.34 |
| Edelweiss Large Cap Fund | 13.3% | +1.65 | 11.8% | +0.24 |
| Bandhan Large Cap Fund | 13.2% | +1.59 | 12.0% | +0.42 |
| Kotak Large Cap Fund | 13.0% | +1.33 | 11.7% | +0.10 |
| Mirae Asset Large Cap Fund | 13.0% | +1.29 | 11.9% | +0.30 |
| HSBC Large Cap Fund | 12.3% | +0.68 | 11.4% | -0.20 |
| SBI Large Cap Fund | 12.2% | +0.49 | 11.3% | -0.30 |
| Aditya Birla Sun Life Large Cap Fund | 11.9% | +0.23 | 11.1% | -0.50 |
| Groww Large Cap Fund | 11.8% | +0.15 | 10.2% | -1.33 |
| UTI Large Cap Fund | 11.6% | -0.06 | 10.7% | -0.90 |
| Franklin India Large Cap Fund | 11.0% | -0.62 | 10.2% | -1.39 |
| DSP Large Cap Fund | 10.9% | -0.76 | 10.0% | -1.52 |
| LIC MF Large Cap Fund | 10.8% | -0.83 | 9.6% | -1.97 |
| Taurus Large Cap Fund | 10.2% | -1.46 | 9.9% | -1.64 |
| UTI Nifty 50 Index Fund (benchmark) | 11.7% | 0.00 | 11.6% | 0.00 |
Yearly return of each fund's direct plan minus the UTI Nifty 50 Index Fund (direct), 31 August 2016 to 31 August 2026, in percentage points.
The spread is narrow. The best fund beat the index fund by 2.3 percentage points a year; the worst trailed by 1.5. Only 6 of 15 beat it by more than 1% a year, even before you account for the risk of picking the wrong one.
Why active funds looked good recently
Over the last three years, all 18 active funds beat the Nifty 50 index fund in direct plans. That isn't because managers suddenly became brilliant. Large-cap funds are benchmarked to the Nifty 100 and are allowed to put up to 20% outside the top 100 stocks. Recently, that wider market did better than the Nifty 50.
| Index (price return) | 3 years | 5 years | 10 years |
|---|---|---|---|
| Nifty 100 | 9.5% | 7.8% | 10.9% |
| Nifty 50 | 7.7% | 7.0% | 10.6% |
| Gap | +1.8 pp | +0.7 pp | +0.3 pp |
Over 10 years, the gap between the two indices was small (0.3 pp a year), and the active edge shrank with it. So part of what looks like skill is simply holding a slightly different basket. A Nifty 100 or Nifty Next 50 index fund would have captured some of that for a fraction of the cost.
That's also why SPIVA's results look much worse for active funds than mine. SPIVA compares large-cap funds with the broader S&P India LargeMidCap index, and it includes funds that were closed or merged along the way. My list only has today's survivors, which flatters active funds.
| Holding period | Large-cap funds that underperformed |
|---|---|
| 3 years | 80% |
| 5 years | 85% |
| 10 years | 74% |
Source: SPIVA India Mid-Year 2026 scorecard, data to 30 June 2026, published by S&P Dow Jones Indices.
Do the winners keep winning?
Even if some active funds beat the index, you have to pick them in advance. The usual method is to choose the fund with the best recent record. So I split the last 10 years into two halves and checked whether the leaders of the first half stayed ahead in the second.
Ranks of the three best large-cap funds of September 2016 to August 2021, in the next five years. Direct plans, 15 funds with 10-year history.
They didn't. The top fund of 2016–2021 fell to 13th place. In the first half, only 4 of 15 funds beat the index fund; in the second, 13 did; only 3 managed both. Past returns told you very little about which fund would win next.
What this means for your portfolio
- For a core holding, an index fund is hard to regret. You get the market's return, minus about 0.1–0.3% a year, with no manager risk.
- If you choose active, use the direct plan. In regular plans, most large-cap funds lost to the index fund over 10 years.
- Compare like with like. A large-cap fund that beats the Nifty 50 may just be holding Nifty Next 50 stocks. Check it against the Nifty 100 too.
- Don't pick on last year's ranking. Leadership changed completely between the two five-year periods.
- Hold long enough for either choice to work. See how often the Nifty loses money by holding period and real ₹5,000 SIP results.
Frequently asked questions
Do active large-cap funds beat the Nifty 50 in India?
Over 10 years to August 2026, 10 of 15 direct plans beat a Nifty 50 index fund, but only 6 of 15 regular plans did. S&P's SPIVA scorecard found 74% of large-cap funds underperformed their benchmark over 10 years.
Is an index fund better than an active fund?
For most investors in large caps, an index fund has been the more reliable choice: lower costs, no manager risk, and most regular-plan active funds trailed it over 10 years.
Why have large-cap funds beaten the Nifty 50 recently?
Partly because they can hold stocks outside the Nifty 50. The Nifty 100 beat the Nifty 50 by 1.8% a year over the three years to August 2026.
Should I pick the large-cap fund with the best past returns?
History suggests not. The best fund of 2016–2021 ranked 13th of 15 over 2021–2026, and only 3 of 15 beat the index in both periods.
What is SPIVA?
SPIVA (S&P Indices Versus Active) is a twice-yearly scorecard by S&P Dow Jones Indices that compares active funds with their benchmarks, including funds that closed or merged.
Related reading: Direct vs regular mutual funds · ₹5,000 SIP for 10, 15 and 20 years · Where to invest ₹10 lakh for 10 years
Sources and method: Large-cap scheme list from AMFI (NAVAll, Large Cap Fund category); daily NAVs of growth options from AMFI via mfapi.in, to 31 August 2026. Benchmark: UTI Nifty 50 Index Fund, direct (scheme 120716) and regular (100822) growth plans. Returns are CAGR from the NAV on or before the start date. Only funds that exist today are included (survivorship bias favours active funds). Nifty 100 vs Nifty 50 gaps use Yahoo Finance price indices (^CNX100, ^NSEI). SPIVA figures: SPIVA India Mid-Year 2026. Category rules: SEBI scheme categorisation circular.
Disclaimer: WelthWest is an analytics and education platform, not a SEBI-registered investment adviser, research analyst or broker. Any companies or funds named are examples from historical data, not recommendations. Past performance does not indicate future returns. Mutual fund investments are subject to market risks; read all scheme-related documents carefully. Research and drafting were assisted by AI; the data, calculations and conclusions were checked by the author. This article is for educational purposes only and is not investment advice.