What Are Index Funds?
There are various types of mutual funds available in the market, one of the specialized types of funds is Index Funds. It is a type of mutual fund which tracks the financial market index, for example, Nifty 50, S&P 500, etc. These funds have a low expense ratio, they have broader market exposure. The index is used to measure different parameters such as interest rates, and inflations also it is used to establish benchmarks to compare with other mutual funds. In these funds, the fund manager invests money in the companies that are present in the index of the market, as the funds manager invests only in the companies of the index, sometimes these funds do not make an equal return as of index, due to tracking error.
What are Index Funds?
Diversification is important to be a good investor, so people buy mutual funds and start investing, but it also has some risks. Now, to decrease the equity market risk. Investors start looking for Index Funds. Here we will talk about Index Funds along with their benefits and a lot more.