the base rate of beating the market

A friend forwarded me a fund's ten year track record on Saturday. Every year green. He wanted to know if he should put more in.

I did not look at his fund. I pulled the SPIVA India scorecard instead.

SPIVA keeps score of active funds against a plain benchmark. Over the ten years to June 2025, 73 out of every 100 active large cap funds in India lost to that benchmark. Not in America, where everyone quotes this number. Here.

The reflex is to say large caps are efficient, so go active in the smaller names where a manager can actually dig. Fine. Look at the smaller names. Over the same ten years, 82 out of 100 mid and small cap funds lost too. Tax saving ELSS funds, 87 out of 100.

Now the part that fools people. In the first half of this year, active mid and small cap funds actually won. Only 34 of 100 lagged the index, their best run since 2014. Screenshot that window and active looks brilliant. Stretch the same category to ten years and 82 of 100 lose. A short window flatters. Time is the filter that separates a good stretch from a good process.

I want to be careful here. This is not index good, active bad. Plenty of excellent managers exist. It is a question of odds. If roughly three out of four lose to a plain benchmark over a decade, then "I will pick the winner in advance" is a low odds bet, not a plan.

That is the whole case for a rules based approach. A rule does not have to be the rare genius manager. It just has to skip the guess, and the fee stacked on the guess.

Beating the index is a coin most managers lose over ten years. The real question is not which one wins. It is whether you should pay to flip it.

If you want to see the cost and the structure side by side before you pick, that is what I have been building: