ADVANTAGES OF INVESTING THROUGH INDEX FUNDS

Read in: 1min, Published On , 09 Sep 2020

ADVANTAGES OF INVESTING THROUGH INDEX FUNDS
 
LOW COST
Compared to actively managed funds which charge between 1.5% and 2.75% per annum, costs here are 1/10th or even less than that. Exit load in these funds is also very low. 
 
NO SCOPE FOR REGRET ABOUT THE CHOICE OF FUNDS
If you choose an actively managed fund and the same performs badly compared to other funds, you may feel bad about your choice. If you choose to invest through a passively managed index fund, it will perform as per the performance of the index and there is no gap between the expectation and the actual performance. 
 
NO FUND MANAGER RISK
Index funds eliminate the risk of performance of a fund manager that you take in case you invest through an actively managed fund. 
 
NO NEED TO CHOOSE A FUND, STOCKS ETC
Investors investing in an index fund do not need to select the right fund that is suitable to his/her risk profile. Here all that he/she has to decide is if he/she has the appetite for index-related risks. The same applies in case an investor wants to invest directly in stocks compared to through an index fund.