AUR RETURNS BHI
KAM NAHIN HAI!
*Index Funds should form part of your Core portfolio.
What is an Index Fund?
- Let’s say your investments are cricketers competing in series of matches over a long
period of time (your investment term in the market).
- Each cricketer represents a company you are invested in through an index fund.
- Each team is an index fund representing the best players in the country.
- A cricketer will be replaced if there are better players or if his long term performance
- This process of churn ensures that only the best performing cricketers (investments)
are chosen to represent the country/team (Index Fund).
- Also, the best players (performing companies) keep replacing the ones who retire
(companies that have stopped functioning).
- In the end, with index funds you are rewarded with the best performing companies
(cricketers) over your investment term (matches).
- Just like in cricket, in an index fund, performers stay and non performers are removed.
Why choose Index Funds?
compared to actively
managed mutual funds
compared to active mutual funds
compound over the long run
Index Funds and Mutual Funds
What’s the Difference?
Index Funds – Cost Matters Hypothesis
- Every year, Rs. 15,000 cr commission* is deducted from investor’s MF investments
- India is one of the highest cost MF markets globally^
- The table below shows the impact of cost over a 10-25 year horizon how even if a regular mutual
fund is able to keep up with index returns but charges 2% vs Index Fund charging 0.2%
- The gap opens up after year 10 and keeps compounding