In contrast, active investing involves active stock selection and the objective of active investing is to outperform the market or the index. In India, Active funds have to track a pre-identified benchmark, usually, an index and their holdings comprise a subset of the stocks in this benchmark index. The portfolio manager’s investment philosophy and expertise become crucial to stock selection and impact an active funds’ ability to deliver outperformance. However, Active funds often find it difficult to beat the market and it is undoubtedly hard for an active fund manager to maintain an analytical edge over other fund managers. Active funds require research analysts to provide research and insights; and skilled fund managers for stock selection. These costs also create an additional hurdle as the fund management team must outperform the market after their costs. These issues can often translate into Active funds underperformance versus their benchmark.