Weigh your options before going passive on mid- and small-cap equity funds

The majority of active funds still outperform their benchmarks and passive funds don't have a long track record in these two segments

The new fund offer (NFO) of Nippon India Nifty Smallcap 250 Index Fund is underway at present. With the launch of this fund, six passive products (index funds and exchange traded funds or ETFs) are now available in the mid- and small-cap segments. After years of underperformance by the majority of large-cap active funds against their benchmarks, many financial advisors now suggest that investors should have either 100 per cent, or at least 50 per cent, exposure to passive funds in this segment. But such a consensus does not prevail when it comes to passive funds in the mid- and