Hello guys , Today we will discuss about index funds and mutual funds , difference between mutual funds and index funds and how the talk of index funds started.So Let's start our discussion about mutual funds Vs index funds.

DIFFERENCE BETWEEN MUTUAL FUNDS AND INDEX FUNDS?
HOW TALK OF INDEX FUNDS STARTED?
INDEX FUNDS VS MUTUAL FUNDS IN INDIA ?

What you think which one is better?

The talk of index funds gets popular when Warren buffet said that index funds or passive funds are better investment option And afterwards inflow in index funds increases in India.But investment is not a mathematics rather it is a economics.As one investment can best for one person not for other. Investment is dependent on climate, country, your minimum return requirement etc.

The statement of Warren buffet shall be true but in context of USA. As USA has developed economy, mature market , slow growth rate and valuation difference is not much so it's difficult to beat index funds .
And India is a developing country . There growth rate is high, market not mature.
So in India , there's possibilities of finding undervalued shares and then investment it will results in win over index funds .

There are many mutual funds who beat index funds consistently.

mutual funds OR index funds?

Index funds Vs mutual funds still comparison

Index funds invest only in one cap which can large cap, small cap or medium cap but in active mutual funds , funds manager has a power to invest in combination of large, medium and small caps.
Expense ratio of index funds is only 0.1% but in mutual funds which can be 1% or above ,this is because funds manager will only invest in shares in index as per it's weightage.
Tactical call not possible in index funds , it means when shares valuation are overvalued then funds manager can't reserves investment in cash form but in mutual funds it can.
Index funds bets on growth of country and India is a growing country , as sensex in 1979 was 100 and now in 2020 it is 35000. In other hand , many mutual funds manager can't pick shares which can beat index funds.
In index funds, as funds manager invest according to weightage in index, it ignores upcoming opportunities in other shares which can become multibagger shares.
Index funds have a shares which performs good in recent years and enters index.it means it only invest in shares which has best performance in last years. But in active mutual funds , funds manager will invest in shares which has performed and will perform in future.

So after the comparison which one you pick mutual funds or index funds?

Conclusion

Selection is important in mutual funds and if you want higher return than find good fund manager but if you want safe investment option and return which is higher than FD by 2-6% then index funds is best.

HERE IS THE END OF OUR DISCUSSION ABOUT MUTUAL FUNDS VS INDEX FUNDS. AND IF YOU WANT TO KNOW MORE ABOUT MUTUAL FUNDS AND INVESTMENT IN MUTUAL FUNDS THEN YOU CAN CHECK MY PREVIOUS ARTICLE REGARDING MUTUAL FUNDS.

GOOD BYE FOR NOW, WE WILL MEET IN THE NEXT ARTICLE........