Index Fund Corner
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| Scheme Name | 1-Year Return | Invest Now | Fund Category | Expense Ratio |
|---|---|---|---|---|
| Axis Nifty 50 Index Fund | +32.80% | Invest Now | Equity: Large Cap | 0.12% |
| Axis Nifty 100 Index Fund | +38.59% | Invest Now | Equity: Large Cap | 0.21% |
| Axis Nifty Next 50 Index Fund | +71.83% | Invest Now | Equity: Large Cap | 0.25% |
| Axis Nifty 500 Index Fund | — | Invest Now | Equity: Flexi Cap | 0.10% |
| Axis Nifty Midcap 50 Index Fund | +46.03% | Invest Now | Equity: Mid Cap | 0.28% |
Active investing: A hands-on strategy
Active investing involves constant management, with fund managers or individual investors making decisions based on market research and analysis. The goal is to outperform the market by selecting securities expected to do better than the broader index. This strategy often involves higher fees due to more frequent trading and research costs.
“Active investing usually involves higher costs due to higher management fees and transaction costs as compared to passive investing,” Ratish Gupta, Chartered Marketer at Wealth Wisdom India Pvt Ltd told CNBC-TV18, adding that offers the potential for higher returns but also comes with greater risks and cost.
As opposed to the active trading strategy, passive investing offers more stable and predictable outcomes over the long-term, according to Gupta.
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What is the Passive investing strategy?
Passive investing is based on replicating the performance of a market index, such as the Nifty 50. This strategy is less hands-on and focuses on long-term growth with lower costs. Passive investors accept market returns and avoid the need for constant buying and selling, which reduces transaction costs and management fees.
“Passive investing does not mandate beating the benchmark. Rather, the fund manager needs to closely mirror the benchmark performance. It does not require deep research and involves lower cost,” explains Mayank Misra, VP of Product Management at INDmoney.
What should be your trading strategy?
The decision between active and passive investing depends on the investor’s goals and risk tolerance. Active investing may suit those seeking higher returns and willing to take on more risk, while passive investing fits those looking for a stable, long-term strategy.
“Investors who want the flexibility to adjust their portfolios based on market changes should consider active investing,” says Ratish Gupta. “However, for those preferring a hands-off approach with steady returns, passive investing is the way to go.”
Meanwhile, INDmoney’s Mayank Misra believes investors can adopt a blend of both strategies to balance risk and reward, besides diversifying their investment portfolio.
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First Published: Dec 13, 2024 8:17 PM IST
