Re: Invest In Index Funds
Index funds will possibly equal returns from the best equity diversified funds only in a time period with a major correction, like the one we witnessed in May-June. If there is no correction then owing to active portfolio management a diversified equity fund will far outperform any index fund.
True index funds do have a lowere load and recurring charges than diversified equity funds but despite this the returns from diversified equity funds are not only greater but far greater than index funds in INDIA, however in USA I believe 75% of the diversified equity funds including those which practice closet indexing underperform the benchmark in index, so the experts suggest its better to go with index funds for the long term. However this is not the case in India.
Moreover in India the tracking error is quite high for index funds and most of them cant even replicate the returns of the index.
In India there is nothing to best diversified equity funds especially for the long term.
I wouldn't put more than 10% of my money allocated to MF's in index funds, the rest would go to diversified equity and balanced funds in a ratio determined by my risk exposure.
Index funds will possibly equal returns from the best equity diversified funds only in a time period with a major correction, like the one we witnessed in May-June. If there is no correction then owing to active portfolio management a diversified equity fund will far outperform any index fund.
True index funds do have a lowere load and recurring charges than diversified equity funds but despite this the returns from diversified equity funds are not only greater but far greater than index funds in INDIA, however in USA I believe 75% of the diversified equity funds including those which practice closet indexing underperform the benchmark in index, so the experts suggest its better to go with index funds for the long term. However this is not the case in India.
Moreover in India the tracking error is quite high for index funds and most of them cant even replicate the returns of the index.
In India there is nothing to best diversified equity funds especially for the long term.
I wouldn't put more than 10% of my money allocated to MF's in index funds, the rest would go to diversified equity and balanced funds in a ratio determined by my risk exposure.