Flight 3 · Lesson 4 of 8

Index Funds

Every fund has a different role. Learn which one fits your goals.

1 min readEducation, not advice

An index fund does not try to beat the market. It copies a published list, such as the Nifty 50, holding every company in it in the same proportion. No manager picks anything; the fund simply tracks.

Because there is no stock-picking, costs are very low, often a quarter of an active fund's expense ratio. And because most active managers struggle to beat the index consistently over long periods, a cheap tracker is a credible core holding.

The limitation is the index itself. An index fund will fall exactly as far as the market falls, and will never do better than the market. Factor index funds, which track rule-based lists such as momentum or value stocks, sit between pure tracking and active management.

Buzz Bite

If you cannot name why you are paying an active manager, own the index.

In this Flight
  1. Equity Funds
  2. Debt Funds
  3. Hybrid Funds
  4. Index Funds
  5. ELSS (Tax Saver) Funds
  6. Liquid Funds
  7. International & Thematic Funds
  8. Large Cap, Mid Cap & Small Cap
← Hybrid FundsELSS (Tax Saver) Funds →

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