This is the archive of all our articles related to how index investing or passive investing
In this article, we show how the NAV of an index fund or the price of an ETF is affected by a market crash and discuss a simple, effective way to measure tracking error. That is how well the fund or ETF was able to track the underlying total returns index. Textbooks define tracking error…
Continue reading →Ranjith writes, “Thanks to your articles I have started my investment journey with Nifty 50 and Nifty Next 50 index funds. Should I also start a SIP in a Nifty Midcap 150 index fund for wider market coverage?”. Let us find out if this has been worth the effort in the past. From the point…
Continue reading →A common question investors have is, “should I use the Nifty or the Sensex for passive investing?” In this article, we report the return difference between the Sensex and Nifty for various durations to appreciate how a 30 stock index can differ from a 50 stock index. Sensex is the oldest stock index of India….
Continue reading →We present the result of SIP returns comparison: Nifty 50 vs active mutual funds (large cap, large and mid cap, mid cap, small cap and multi-cap) over the last fifteen years. The dramatic drop in outperformance seems to have started seven-eight years ago and not just from Feb 2018 as earlier believed. We had earlier…
Continue reading →“What return can I expect from a Nifty 50 SIP over the next 10 years?” This is a typical newbie question. We have pointed out that no one can or no one should expect returns from mutual funds. Yet we still see statements on social media that 10-12% return is “easily possible”. On what basis…
Continue reading →In this article, we present results from an analysis of the NIfty 50 portfolio over the last ten years. We find that the weight of the top five stock is currently the highest and six stocks dominate the top five positions. We use the portfolio of Nippon India ETF Nifty BeEs as a proxy for…
Continue reading →A combination of Nifty (N50) and Nifty Next 50 (NN50) index funds is enough for investors to create a well-diversified equity portfolio – large cap heavy (more of Nifty) or a midcap-heavy (significant exposure to Nifty Next 50). What if one avoids Nifty and invests 50% in Nifty Next 50 and 50% in debt? This…
Continue reading →A person with a profile name MoneyGita asks if dividend income can be obtained from index funds (or ETFs) after retirement instead of using stocks. Sometimes the answer to a question in personal finance seems like an obvious “no”, but on closer inspection seems, “why not?!”. A discussion.
Continue reading →Natesh asks, “I’m 24 and investing for my retirement goal which is around 30 years away. Asset Allocation: Equity 70% and fixed income 30%. Within the equity portion, Axis Nifty 100 Index fund – 75% and MO S&P 500 Index fund – 25%. Is this a good plan? Is it ok to use the Axis…
Continue reading →A reader asks, “can I hold 25% of index mutual funds in my portfolio?”. Superficially it might seem like a wrong thing to do. However, it depends on the index and the rest of the equity portfolio.
Continue reading →The NSE has introduced a new strategy index, Nifty200 Momentum 30 index which tracks the performance of 30 stocks with high momentum score. We evaluate the performance of the index in this article.
Continue reading →“My SIP in Nifty Next 50 over the two and a half years has underperformed a Nifty SIP. Should I switch my SIP from Nifty Next 50 to Nifty 50?” We discuss this question posed by Nirmal.
Continue reading →Here are 62 indices from NSE, BSE and CRISIL with more than 10% returns from a 15-year SIP from 1st Aug 2005 to 7th Aug 2020.
Continue reading →Take the NIfty 50 index. It has 50 stocks and that sounds like a lot, but just ten of then make 62.7% of the total weight. In the case of the Sensex, it is 71.11%. Even in the case of the S&P 500 the top 10 accounts for 27.1% of the total weight (all nos…
Continue reading →Readers may recall that the Nifty/Sensex moved up since Feb 2018 (until the crash this year) while the rest of the market moved down. We had reported that this market imbalance/inhomogeneity lead to an all-time high return difference between Nifty 50 vs Nifty 50 Equal-weight indices in Dec 2019 and also pointed out that Market crash…
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