What is Index Fund


An Index Fund is one of the mutual funds or exchange-traded funds (ETFs) that are designed to follow preset rules just to make sure that the fund can easily track the components of investments or of a market index.

Index funds also help in balancing the risk in the portfolio of an investor, as market swings turn out to be less volatile across as index as compared with individual stocks.

Quick Takeover:

  • They pool money from different investors to buy bonds, securities or individual stocks to make up a particular market-index.

  • They are one of the good ways to minimize risk, the reason being they track a market index, which somehow rises in value over the certain time-period.

  • Index funds are known as a passive investment with low fees as compared by those ‘mutual funds’ that are managed on a daily basis by brokers. They also show better returns.


Best 5 Index Mutual Funds

ICICI Pru Nifty Next 50 Index Fund(G)

Returns 3Y: 14.88%

IDBI Nifty Junior Index Fund (G)- Direct

Return 3Y: 14.78%

HDFC Index Fund Nifty 50 Plan(G)

Return 3Y: 15.33%

UTI Nifty Index Fund (G)- Direct Plan

Return 3Y: 15.34%

SBI Nifty Index Fund (G) - Direct Plan

Return 3Y: 15.18%

  • Past Performance Is No Guarantee of Future Results

Before Opting for Index Funds, Let’s Figure Out The Benefits Regarding The Same. Here:

  • Return Factor: Unlike actively managed mutual funds, index funds track the overall performance of the underlying benchmark passively. Although, these funds do not point to beat the benchmark but to replicate the performance. NOTE: Before investing, try to shortlist a fund which has the minimum tracking error; lower the errors, better performance of the fund is going to be.
  • Risk Tolerance: Not to forget, index funds are less prone to equity-related risks and volatility. They are an amazing option to consider during a market rally if you want to earn better returns. TIP: Having a mix of index funds and actively-managed funds in your portfolio is recommended.
  • Financial Goals: Being the haven of high risk-high return, these funds are good to go for generating enough wealth for your goals.
  • Tax on Gains: You earn capital gains when you redeem units of index funds, also the capital gains are taxable (depends on how long you stay invested (holding period)).

How to Invest in Index Funds with Gulaq

How index fund works is not a tedious job, especially with Gulaq. With hassle-free and paperless documentation, the summing-up of your investment journey becomes easy. All you need to do is sign-in at Check your KYC for FREE. Select the type of index fund from hand-picked mutual funds and the tenure. And it’s done!

How Index Funds Works?

An Index fund is a mutual fund which is designed to track the returns of a market index. An index is basically a group of securities that represents a particular segment of the market (stock market, bond market, etc.). The index fund works by tracking a benchmark like the Nifty and Sensex. Their portfolio will consist of exactly the same proportions of stocks as either of these benchmarks. Since the index fund is passively managed funds that allow investors to invest intelligently in the stock market. An index fund manager decides which stocks must be bought and sold in retrospect of the underlying benchmark. The whole purpose of the index fund is to match the benchmark performance. In case, if there is a small difference between the fund performance and index, then it is known as tracking error. An index fund manager always tries to reduce the tracking error. It is the safest option for the retail investor who have no prior idea of the stock market.

Who Should Invest in Index Funds?


Investing in index funds is solely depends upon the investor preferences and risk appetite. These funds are ideal for those investors who want to avoid risk and get expected returns. These funds do not require much extensive tracking. The goal of the index fund is to track the performance of the benchmark. The fund manager is not expected to implement any style or strategy to generate excess returns over and above the index returns. These funds will give you returns matching the upside that the index sees. So, any retail who doesn’t have much prior knowledge about market operation, then it’s better to start investing in Index fund.

Frequently Asked Questions

Index Mutual Funds Lookin Period?

Tax on Index Mutual Funds Return?

Start Investing in Index Mutual Funds

Investment Ready in 30 Seconds.

Gulaq provides you the simplest and an easiest way to invest. It has no commission, no account fees, no hidden charges as well as you can be investment ready in less than 30 seconds. Our platforms provide the most user-friendly experience.

Attention Investor
Investments in Mutual fund & Securities Market are subject to market risks. Please read the scheme information and other related documents carefully before investing. Past performance is not indicative of future returns. Please consider your specific investment requirements before choosing a fund or designing a portfolio that suits your needs. Terms and conditions of the website are applicable.

Gulaq Registered Office
Estee Financial Services Pvt. Ltd. (hereinafter referred to as “EFSPL”) Formerly Estee Commodities Pvt. Ltd ( hereinafter referred to as “ECPL”), 7th Floor, Block 1, Vatika Business Park, Sohna Road, Sector 49, Gurugram, Haryana 122001.
CIN: U51909HR2012PTC054035

Registration Detail 
Estee Advisors Pvt Limited (hereinafter referred to as “EAPL”) is registered with the Securities and Exchange Board of India as Stock Broker with registration number INZ000170130 and registered with BSE Star with code 24408 for mutual fund transaction facility. EFSPL and EAPL are group companies and EAPL is authorized to provide its services to the Users on the Gulaq website/app under a Sub-distribution agreement with EFSPL.

Complaints & Grievances 
In case of any grievances/ complaints please write to us [email protected]


Mutual fund investments are subject to market risks, read all scheme documents carefully.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept