This is the archive of all our articles related to how index investing or passive investing
A reader writes, “Sir, you have repeatedly pointed out that it is hard for most active funds to beat the index, and this applies not only to large cap funds but also to mid cap and even small cap funds (when benchmarked with a mid cap index). However, can I use a hybrid like an…
Continue reading →A reader asks, “Sir, can we use Sensex or Nifty ETFs for long term goals instead of index funds? If so, which is better, Sensex or Nifty ETFs?” We recommend not using any ETF for investing because of possible price-NAV swings during times of crisis and their persistence for weeks. This can happen in any ETF…
Continue reading →In this article, we explain why conventional ways of measuring ETF tracking errors can be misleading and present an alternative. The efficiency of a passive fund (index fund or ETF) is measured by the tracking error or tracking difference. The tracking difference is simply the fund return minus benchmark return. This must be a small…
Continue reading →In this article, we tabulate index funds with the largest deviation in 1Y return (trailing as of 8th July 2022) from their corresponding indices. Regular readers may be aware that the most practical way to evaluate how efficiently an index fund is tracking its index is not the tracking error” but the return difference. For…
Continue reading →In this article, SEBI registered fee-only advisor Swapnil Kendhe discusses if passive investing aka index investing is suitable over the next 20-30 years in India. About the author: Swapnil is a SEBI Registered Investment Advisor and part of my fee-only financial planners’ list. You can learn more about him and his service via his website,…
Continue reading →In an update to our previous reports, we find out how actively managed mid cap funds fared against Nifty Midcap 150 Total Returns Index (TRI) and factor-based index Nifty Midcap 150 Quality 50 TRI. From April 2022, our monthly equity mutual fund screener will include benchmarking against the Quality 50 mid cap index and NIfty…
Continue reading →NSE has recently changed its inclusion criterion which has allowed new companies like Paytm (One 97 Communications Ltd.), Zomato and Nykaa (FSN E-Commerce Ventures Ltd. ) to be part of the index from March 31st 2022. We had discussed what investors should do in this regard: Should I exit Nifty Next 50 because of Paytm,…
Continue reading →A reader asks, “Should investors look to reduce/eliminate exposure to Nifty Next 50 because the NSE has recently changed its inclusion criterion that has allowed new companies like Paytm (One 97 Communications Ltd.), Zomato and Nykaa (FSN E-Commerce Ventures Ltd. ) to be part of the index from March 31st 2022?” On Feb 24th 2022,…
Continue reading →Abhijit asks, “Sir, I have been investing in ICICI Nifty Next 50 Index fund for the past three years. I am shocked to learn that the index has failed to beat Nifty for the past 6 years. The higher expense ratio for these funds makes the underperformance even worse. As you have pointed out many…
Continue reading →After the publication of our review of UTI S&P BSE Low Volatility Index Fund, we have received several requests from readers to compare low volatility indices with aggressive hybrid funds/indices. Such a comparison may seem wrong at first glance. After all, how can we compare a 100% equity portfolio with a 65%-80% equity portfolio? However, a…
Continue reading →UTI S&P BSE Low Volatility Index Fund is an open-ended scheme tracking the S&P BSE Low Volatility TRI. In this review, we evaluate the pros and cons of investing in this fund currently in its new fund offer period. Regular readers may be aware that we have proclaimed the benefits of low volatility investing for…
Continue reading →In this article, we compare the performance of the Nifty 100 Low volatility 30 Total Return Index with the Nifty 50 Total Return Index. The 5-year and 10-year return differences between these indices are currently at an all-time low. The Nifty 100 low volatility 30 index consists of 30 large cap stocks from the Nifty…
Continue reading →In response to our FAQ on index investing, a viewer on our YouTube channel asks, “I am doing sip for the past one year in nifty50 and nifty next 50. Is frequent(once in a year) rebalancing necessary even for passively managed funds?” While index funds remove the need for frequent fund performance review, they cannot…
Continue reading →In this article, we discuss some frequently asked questions on index investing aka passive investing. First the basics. A passive fund is a mutual fund that tracks the stocks in a given index. The fund manager of a passive fund does not make any stock/bond selection on their own. There are two types of passive…
Continue reading →The Nifty Total Market Index consists of 750 stocks covering large, mid, small and microcap segments with stock weights determined by free-float market capitalization. The NSE launched this index in Oct 2021 with a backtested history up to April 2005. This article compares the rolling returns of the Nifty Total Market Index and Nifty 50…
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