By Malvika Saraf and Parthajit Kayal
Index investing is a passive investment strategy that attempts to generate returns similar to a broad market index, such as Sensex and Nifty. Investors use this strategy to replicate the performance of a specific index—generally an equity—by purchasing the component stocks of the index or investing in an index mutual fund or exchange traded fund that itself closely tracks the underlying index.
Most fund managers of active funds fail to beat the index over the long term. Further, active funds are expensive due to high fees. Moreover, for a retail investor, the process of active fund selection for investment is a tedious job similar to a stock selection. It is an art that requires a process and thus most
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