What are index funds? Who should invest in them?

An Index Mutual Fund Tracks a Market Index

For example, they buy the same stocks and in the same proportion present on Nifty/Sensex.

Low Expense Ratio

Since these funds imitate indices, the role of fund manager is limited. So, the expense ratio is lower than active funds.

Tracking Error

However, funds can’t always match the movements of an index, causing tracking error. So, a fund with minimum tracking error is ideal.

Should You Invest?

Conservative equity investors who want to stick with large caps can consider investing in large-cap index funds. Many index funds have beaten active large-cap funds over long-term

How to Get Started?

Most fintech platforms offer index funds. The minimum investment amount is Rs 500!