Low cost funds like Index Funds or ETFs have relatively lower total expense ratios Percentage of the fund's assets used to cover expenses (administrative, management, marketing, others) per year. when compared to other schemes with similar objectives.
Index funds or ETFs are meant for those investors who are discerning, experienced and cost-sensitive or are relatively new to investing but don't want to spend time identifying the best fund or fund manager, and more importantly don’t want to miss out on investing in the stock market to gain from it.
An exchange-traded fund (ETF) is a basket of securities that tracks an underlying index, sector, commodities or other assets, but are purchased or sold on the stock exchange, Read More
Index funds are low cost mutual funds which attempt to simply replicate different market indices, for eg Nifty 50 or BSE Sensex. These are an unbiased way of investing in Read More
ETFs are basket of securities that are traded on a stock exchange just like any other stock. These funds usually track an index or have a fixed portfolio strategy based on some index so they are passive in nature. In effect they are like a normal mutual fund but the only difference being that while an open-ended fund would have a single NAV at the end of the day at which all the transactions take place the situation is different for the ETF. Since the ETF is traded for the entire day, it gives multiple opportunities and prices at which the investor can either enter of exit the fund.
An index fund is a type of mutual fund with a portfolio constructed to match or track the components of a financial market index. An index mutual fund is said to provide broad market exposure, low operating expenses, and low portfolio turnover. These funds follow their benchmark index regardless of the state of the markets.
Rule based fund is a type of mutual fund where stock selection happens based on pre-determined rules. The fund is run with minimal human intervention, which means little to no biases.
Low cost funds can potentially make a big difference in the returns you earn over the long-term. Since less of your investment goes towards costs (expenses) and more gets invested, you could earn as much return from these as from similarly themed actively managed funds, at lower cost! What are the other benefits? Watch the video.
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Exchange-Traded Funds
Index Funds