Mutual funds are gaining popularity in the Indian market as investment options, given their track record of yielding better returns as compared to fixed deposits, public provident funds or insurance-linked investment products.
However, a new debate has now started whether one should go for passive index funds or stick to actively-managed mutual funds.
Given that most actively-managed funds have failed to beat market expectations in the last year or so, this argument has gained a lot of steam.
Most market experts are of the opinion that investing in index funds adds a lot of value to an individual’s portfolio but they also caution that one should invest only based on one’s risk profile and appetite.
But what exactly are index funds? Index funds are mutual funds that imitate the portfolio of a specific index like the Sensex or Nifty instead of the active-picking of specific stock based on anticipated performance. It means that these funds just follow their benchmark indices irrespective of how the overall market performs.
This takes most of the decisionmaking dilemmas out of the equation, making investing in equity funds extremely simple. Given their simplicity and historic performance, investment legend Warren Buffett has also recommended index funds for retirement saving plans. According to Buffet, it makes more sense for an average investor to buy all of the S&P 500 companies at the low cost an index fund offers, instead of picking out individual stocks for investment.
When it comes to returns, the main difference between a passive and an active fund is the cost involved. Index funds have a lower expense ratio since fund managers do not need to actively pick stocks or time the market.
Diese Geschichte stammt aus der February, 2020-Ausgabe von Outlook Money.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent ? Anmelden
Diese Geschichte stammt aus der February, 2020-Ausgabe von Outlook Money.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent? Anmelden
Stay Ahead Of AI-Powered Cyber Fraud
AI has become an integral part of our lives, right from customer service at banks to insurance claims. But it has now become a powerful arsenal for the fraudsters too who are increasingly using AI to scam individuals and corporations alike to commit fraud. The key is to stay vigilant
Travelling To Europe? Pack In The Essential Covers
Smart travellers must know that insurance is a must-have. From essential health coverage to theft protection and trip interruptions, know what you need for a worry-free Europe trip
How To Spend Wisely This Year-End
We all spend during the year-end. But the trick is not to overspend or borrow, either from friends, or your own investment, to fund your indulgence. Maintaining balance is the key
Travel Now Pay Later (TNPL)
Travel now, pay later (TNPL) is a close cousin of the more popular buy now, pay later (BNPL) schemes.
12 Books Devina Mehra Loved Reading In 2024
Listing books of her choice, among the ones she reads during the year, is ace investor Devina Mehra's favourite year-end activity. She says it's a daunting task to pick around 12 books from a list of 50.
Here's How To Avail Of Ayushman Bharat Yojana
Launched in 2018, the Ayushman Bharat Yojana aimed to provide health coverage to targeted benefi ciaries from the Socio-Economic Caste Census (SECC) 2011, based on deprivation and occupational criteria.
'Focus On The Business, Assess If You Want To Be A Partner For 10-20 Years'
Professor Sanjay Bakshi, a value investor, behavioural economist and adjunct professor at Flame University, Pune, gives his unique perspective on how to choose a stock, in an interview with Nidhi Sinha, editor, Outlook Money, as part of the Wealth Wizards series. He also shares his learnings from role models Warren Buffett, Charlie Munger, Benjamin Graham and others, and how being a chartered accountant, economist, investor and teacher make him into what he is today. Edited excerpts from the interview
The New Trump Card For IT, Pharma
Donald Trump has been re-elected as the 47th President of the US after a gap of four years. Here's how it will affect the Indian markets and how it will benefit sectors such as IT, pharma, export-oriented sectors and others
European Sojourn
Tight on budget? Dump the popular European destinations for the little-known wonders that are equally attractive
Gold ETFs And FoFs
While Indians love to invest in physical gold, even mutual funds offer the option, but in paper format.