Index Funds today are a source of investment for investors looking
at a long term, less risky form of investment. The success of index funds
depends on their low volatility and therefore the choice of the index.
Index funds are a relatively small part of the overall mutual
fund industry in India,
there are two aspects to this, the first is that Actively managed funds have performed
better than index funds in the past and people expect that to continue in the
future as well, and secondly, index funds aren’t really low cost in India.
The two main benefits of
investing in index funds – which is low costs and doing better than active
funds have been more or less absent in India so far and it’s hard to say why.
People who want the benefit of passive investing feel that by creating a SIP in
an active mutual fund – you enjoy the same kind of benefit and the past returns
show that it has been beneficial as well.
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