International Journal For Multidisciplinary Research

E-ISSN: 2582-2160   •   Impact Factor: 9.24

A Widely Indexed Open Access Peer Reviewed Multidisciplinary Bi-monthly Scholarly International Journal

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Active Investing vs Passive Investing

Author(s) Yohan Sachit Dedhia
Country India
Abstract This research paper provides a comparative analysis of active and passive investment strategies across three major sectors of the Indian equity market: Pharmaceuticals, FMCG (Fast-Moving Consumer Goods), and Banking. Using quantitative methods and secondary data collected from mutual fund NAVs and benchmark indices between 2023 and 2025, the study evaluates fund performance across key financial metrics including CAGR, Sharpe Ratio, Treynor Ratio, Standard Deviation, Beta, Alpha, and Tracking Error. The descriptive-comparative research design aims to identify whether active or passive funds offer superior returns and risk-adjusted efficiency within each sector. The findings reveal that passive funds significantly outperformed in the Pharma sector due to strong sector-wide tailwinds, while active funds held a marginal advantage in FMCG in terms of raw returns but underperformed on efficiency metrics. In the Banking sector, select active funds generated substantial alpha through tactical stock selection and allocation shifts, although passive funds maintained strong consistency and cost-effectiveness. The study offers critical insights into the dynamics of fund performance in India and provides a practical framework to assist investors in selecting optimal strategies based on sector-specific characteristics and risk preferences.
Keywords Active investing, Passive investing, Mutual funds, Sectoral analysis, CAGR, Sharpe Ratio, Treynor Ratio, Alpha, Beta, Tracking Error, Indian stock market, Pharma sector, FMCG sector, Banking sector, Risk-adjusted returns.
Field Sociology > Banking / Finance
Published In Volume 7, Issue 5, September-October 2025
Published On 2025-10-10
DOI https://doi.org/10.36948/ijfmr.2025.v07i05.57604
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E-ISSN 2582-2160
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