Why Passive Funds?

Risk

Eliminates fund manager risk and therefore the risk of underperforming the benchmark

Long-term

Fund managers change the stocks frequently. An investor who is looking to invest for over 10 years+ is better suited for index funds

Transparency

As indices are pre-defined, investors know the sector, companies and proportion in which their money will be invested

Low Costs

Since index funds are passively managed, cost are kept relatively low

Diversification

Generally tracks broad based indices thus reducing the impact of decline in value of any one stock or industry, sector

Our Index Funds

Index Funds vs ETF - Major Differences

FeaturesExchange Traded Fund (ETFs)Index Fund
FeaturesExchange Traded Fund (ETFs)Index Fund
Net Assets Value (NAV)Real TimeEnd of the day
Liquidity ProviderAuthorised Participants (APs) on stock exchange + Fund itselfOnly by Fund
Portfolio DisclosureDailyMonthly
Intraday TradingPossible if investor has required inventory of unitsNot Possible
Cost EffectivenessEach investor bears their own transaction costTransaction costs are spread across the fund
Holding FormatCompulsory in Demat formPhysical + Demat
Investment DecisionCan be bought / sold anytime during market hours at prices that are expected to be close to actual NAV of the Scheme. Thus, investor invests at real-time prices as opposed to end of day prices.Not applicable

@ In case of ETFs, the Scheme offers units for subscription/ redemption directly with the Mutual Fund subject to minimum lot size of units which are generally high amounts. Investor can buy/ sell ETF any units in cash segment on secondary market of exchanges where it is listed in multiple of 1unit.

Still have some questions about Index Funds?

What is a Mutual Fund?

An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by investment managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in the scheme information document

What does a Mutual Fund do with investor`s money?

Anybody with an investible surplus of as little as a few hundred rupees can invest in mutual funds. The investors buy units of a fund that best suits their investment objectives and future needs. A Mutual Fund invests the pool of money collected from the investors in a range of securities comprising equities, debt, money market instruments etc. after charging for the AMC fees. The income earned and the capital appreciation realised by the scheme, are shared by the investors in same proportion as the number of units owned by them

What is the Regulatory Body for Mutual Funds?

Securities Exchange Board of India (SEBI) is the regulatory body for all the mutual funds mentioned above. All the mutual funds must get registered with SEBI.

Why should I choose to invest in a mutual fund?

For a retail investor who does not have the time and expertise to analyze and invest in stocks and bonds, mutual funds offer a viable investment alternative.

 

This is because:

1. Mutual Funds provide the benefit of cheap access to expensive stocks

2. Mutual funds diversify the risk of the investor by investing in a basket of assets

3. A team of professional fund managers manages them with in-depth research inputs from     investment analysts.

4. Being institutions with good bargaining power in markets, mutual funds have access to crucial corporate information which individual investors cannot access.