New Delhi, Feb. 15 -- As passive funds slowly yet surely get more traction in India, their asset mangers are expanding teams, typically very small, to run operations more efficiently and reduce gaps between their performance versus a market index.

The bigger teams, small even after expansion compared to active funds, are helping passive fund managements create separate verticals, launch more products, and mirror better the indices they want to track.

This relative performance is measured by a metric called tracking error, which in statistical terms is the percentage difference of standard deviation between the fund and the index-essentially checking how closely a fund's performance mimics that of an index.

An increase in team sizes has...