Plus the risk is lesser as you have a diversified portfolio and not just a few stocks. The fund manager in an Index Fund must invest in all the stocks in the same proportion as it is in the index.
So if the index has only limited stocks or one stock has higher weightage, then the portfolio might not be optimally diversified. View this page in app 4. Open app. Home Mutual Funds best index funds. Best Index Funds 22 results. Nippon India Index Sensex. Downside protection. Return p. Expense Ratio 0. Tata Index Sensex Fund. Tata Index Nifty Fund. Nippon India Index Nifty. Axis Nifty Index Fund. Motilal Oswal Nifty 50 Index Fund. Value Research Rating High to Low. Returns High to Low.
Consistency High to Low. Downside Protection High to Low. Hide comparison Compare Clear selection. Ok, got it Ok, Clear all. What is an Index Fund?
Pros Ultimate in diversification Low expense ratios Strong long-term returns Ideal for passive, buy-and-hold investors. Cons Vulnerable to market swings, crashes Lack of flexibility No human element Limited gains.
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Direct Indexing Definition Direct indexing involves purchasing the underlying shares of an index, rather than owning an index fund or ETF. Portfolio Management Definition Portfolio management involves selecting and overseeing a group of investments that meet a client's long-term financial objectives and risk tolerance. Excess Returns Excess returns are returns achieved above and beyond the return of a proxy.
Excess returns will depend on a designated investment return comparison for analysis. Index Hugger An index hugger is a managed mutual fund that tends to perform much like a benchmark index. Partner Links. Related Articles. Portfolio Management What is the difference between passive and active asset management? Vanguard Index Fund: What's the Difference? Investopedia is part of the Dotdash publishing family. Your Privacy Rights. To change or withdraw your consent choices for Investopedia.
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Index mutual funds are a class of equity funds. The asset allocation of an index fund would be the same as that of its underlying index. It is for this reason that the returns offered by index funds are comparable with its underlying index. Index funds are considered one of the most secure equity funds as their portfolio consists of blue-chip stocks.
These are the stocks of well-established companies with an excellent track record. This makes index funds less susceptible to market fluctuations and thereby offering much-needed stability. Opinions expressed are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including any rates, terms and fees associated with financial products, presented in the review is accurate as of the date of publication.
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