A recent study on investor behavior highlighted the increasing preference for index funds among new investors in India. Index funds have gained popularity for offering long-term wealth building opportunities by tracking specific market indices transparently. As financial markets evolve, index funds attract both novice and seasoned investors due to their broad market exposure and potential for market-linked returns.
Index funds aim to replicate benchmark indices like the BSE Sensex or NSE Nifty 50 by mirroring their composition, providing a passive investment strategy in contrast to active management. Key characteristics like transparency, diversification, and low costs make index funds appealing to investors aiming for consistent growth and reduced risk.
The evolving landscape of index funds includes thematic innovations like Smart Beta Index Funds, offering unique investment opportunities aligned with sustainable growth themes. By combining passive and active strategies, investors can aim for consistent growth while adjusting to market opportunities based on individual goals, risk tolerance, and time horizon.
Overall, index funds present a valuable option for investors seeking wealth creation with minimal ongoing management, aligning with a buy-and-hold strategy for long-term market growth.
(The author is Head Products & Alternatives, Axis AMC)
Published 19 May 2024, 21:23 IST