What is Index Fund

Index fund is a best way to passively invest in the growth of the market. You can invest into Nifty via ETF (Exchange Traded Fund), this is the only option to invest in Nifty Index. For a short-term trading perspective, investors can buy Nifty 50 future. It will provide you the same exposure into Nifty with same money as compare to ETF. 

Index funds are low cost and passive way to invest in the entire basket of the stock market. The best way to buy an index fund direct growth is through the SIP or future. An investor can buy it from a direct mutual fund platform that has the best advisory support.

An index fund is a type of mutual fund in which a portfolio is constructed to match or track the components of a financial market index. 

Vanguard 500 Index fund, which tracks the S&P 500 is one of the best-known largest trading funds. The fund provides exposure to US top 500 largest companies. They have a value of about three fourths of the U.S. stock market.  

An index fund is mainly a fund which basically tracks a benchmark like the Nifty or Sensex or S&P 500. It basically a group of securities defining a market segment, which can be either stocks or bond market instrument. In case of India, it is BSE Sensex and NSE Nifty. Basically, an Index fund is a passive fund, which prime motive is to beat the benchmark performance. 

An index fund is mainly a fund which basically tracks a benchmark like the Nifty or Sensex or S&P 500. It basically a group of securities defining a market segment, which can be either stocks or bond market instrument. In case of India, it is BSE Sensex and NSE Nifty. Basically, an Index fund is a passive fund, which prime motive is to beat the benchmark performance. 

Here is the list of best index fund in India. 

•  SBI Nifty Index Fund  
• Reliance Index Fund – Sensex Plan 
• UTI Nifty Index Fund – Direct Growth 
• ICICI Prudential Nifty Next 50 Index  
• Franklin India Index Fund Nifty Plan 

Index funds are generally for a long-term investment horizon. On an average, they have provided more than 10% to 12% on an annual basis 

To invest in S&P 500 index fund from India, an investor needs to follow these procedures: 

• First, open an account with an Indian broker. There are numerousnumbers of funds that offer funds that invest in US markets such as ICICI, Franklin, Motilal Oswal, DSP BlackRock, Birla SunLife 
• An investor needs to open an account with an international broker, which is little bit time consuming. You can invest in a range of funds that track S&P 500. 

An exchange traded index fund is basically a collection of stocks which are sold under the single name on a stock exchange. It is generally a passive managed fund, once it is floating on an exchange, the fund synchronizes the performance of the underlying index. 

Here is the list of the best Vanguard index fund to invest: 

• 500 Index Fund (Admiral Class) – VFIAX. 
• REIT Index Fund (Admiral Shares) – VGSLX. 
• Growth Index Fund (Admiral Shares) – VIGAX. 
• Total Bond Market (ETF) – BND 

Here is the list of few SIP index fund with low tracking error, 

• HDFC Index Fund- Nifty (G) 
• ICICI Pru Nifty Index Fund (G) 
• IDFC Nifty Fund Regular 

Here is the list of best index fund to invest in 2019. 

• UTI Nifty Index fund Direct- Dividend. 
•  IDBI Nifty Index fund Direct- Growth 
• LIC MF Index Nifty Fund Direct- Dividend 

Small cap index funds are those index funds who invest money in the companies having lower market capitalization        

 Large cap index fund is mainly an index fund that invests money in companies with having large market capitalization.

HFRI funds of funds composite index is a global, equal weighted index of the largest hedge funds which are open to the new investments and offer quarterly liquidity or better result. 

UTI Nifty Index fund is basically a fund of fund that is an equity mutual fund, which invest their money in Nifty 50 stocks with the same proportion as that of Nifty value. 

SBI life index fund is basically a scheme launched by SBI, which invest in stocks comprising the Nifty 50 index in the same proportion as their weightage in the index with the objective of achieving returns equivalent to the total returns of Nifty 50 index by minimizing the tracking error between the benchmark index and scheme. 

 Yes, index funds can be traded like stocks. 

The expense ratio of an index fund is approximately quite low, close to 0.2 %. 

 The taxation of index fund totally depends upon the time period in which an investor is invested. Whatever the capital gains you make during the holding period of up to one year are called as Short-term Capital gains (STCG). They are taxed at the rate of 15%. But the capital gains obtained after holding more than one year are called as Long-term capital gain (LTCG). Long Term Capital Gain more than Rs 1 lakh will be taxed 10% without the benefit of indexation. 

Here is the list of index fund for retirement.  

• Reliance Retirement Fund
• Tata Retirement Savings Fund Progressive Plan Direct-Growth 
• HDFC Retirement Savings Fund Equity Plan Direct-Growth 

Index fund is basically a passive fund, whereas a managed fund is an active fund. In the case of Index fund, there is no role of a fund manager as itmust replicate the index. But in case of managed fund, a fund manager chooses the stocks by doing deep research and analysis. 

 An index fund is basically a type of mutual fund, which portfolio is constructed to match the performance of a market indices whether its Nifty, Sensex, S&P500 and Dow Jones. 

 A hedge fund is an alternative passive investment vehicle available only to institutional or large investor. The rate of returns of an index fund is low compared to the hedge fund.  

The index fund 5-year performance is between 10% to 11 % on an average.

Nifty 50 Index fund consists of top 50 listed companies in the National stock exchange. This is the only option for the investor. Nifty 50 can be bought in another segment of trading known as Future and Options. It is also called as derivatives, which mean the value is depended on some other underlying asset. 

A nifty index fund is a mutual fund which invests in the National stock Exchange.  

Equity index fund is a portfolio constructed to match the components of an equity market index, such as Nifty, BSE or S&P 500. 

To invest in index funds in India, user needs to follow these procedures: 

• Go to the portal of Gulaq. 
• Further enter your personal details regarding the amount of investment and period of investment. 
• Now, make sure to get done your e-KYC. 
• Again, invest in your favourite index fund from the list of mutual funds. 

A benchmark index is basically an unmanaged group of securities which are considered as a benchmark to measure a fund’s/stock’s performance. Benchmark index is generally broad market indices like BSE Sensex, CNX Nifty of the Indian Stock market with which mutual fund returns are compared. 

S&P 500 is the standard and poor stock market index fund based on the size of leading 500 US companies. The index lists out the largest 500 publicly traded companies in the United States as measured by “Market Capitalization “. 

 An index fund is a group of stocks or other securities that invest in those indices in their respective weights. The idea behind index funds is the failure of actively managed funds to beat the indices over the long term. 

Here is the list of best, nifty index fund: 

• SBI Nifty Index Fund 
• ICICI Pru Nifty Index Fund
• Reliance Index Fund Nifty Plan (G)
• IDBI Nifty Index Fund

There are several reasons for choosing an index fund over ETF 

• Index fund has low transaction compared to the ETF. 
• Index fund allows you to invest through SIP. 

It is basically a passively managed index fund, which would invest in all the stocks comprising Nifty 50 Index in the same proportion as their weighted in the index. 

Index funds of the open-ended category don’t requireany demat account. These can be bought in typical SIPs They can be bought in typical SIPs as these funds allow fractional units to be transacted. One can buy these funds at NSE website. 

Nifty Next 50 is an index which basically represents the performance ofthe next 50 stocks of National stock exchange that comes after the top 50 stocks in order of free float market capitalization. 

Investment decision in an index fund totally depends upon an investor risk preference, time period and investment goals. Basically, these index funds are good for those investors, who are risk averse and want safe returns. There are mainly two major indices in India Nifty and BSE. Depending on one’s investment goals one can invest in either, Nifty is derived from national fifty companies whereas BSE is derived from Sensitive Index. 

A mid cap index fund is basically an index fund that invests money in companies with having capitalization in the middle range. 

Here is a list of index fund to invest in for the long term: 

•  UTI Nifty Index Fund 
• ICICI Prudential Nifty Next 50 Index Fund. 
• Franklin India Index Fund  

To choose an index mutual fund, there are certain things must be taken into considerations. 

• First, an investor needs to select an index whether it’s NSE, Sensex and S&P500 depending upon their preferences. 

• Afterwards, decide whether you want to buy the mutual fund directly from a company or a brokerage. 
• Look out, they offer commission fee index fund or without having any charge index fund. 

There is no such thing as magic number or figure to invest in index funds. It depends upon an investor preference, risk and investing amount. But minimum one should invest more than multiple thousand. 

• Afterwards, decide whether you want to buy the mutual fund directly from a company or a brokerage. 
• Look out, they offer commission fee index fund or without having any charge index fund. 

Yes, Index funds does pay dividends. 

Buffet is a huge believer in index funds. He mainly recommends top four funds: 

• Vanguard 500 Index Fund Investor 
• Schwab S&P 500 Index Fund 
• Fidelity 500 Index Fund 
• T. Rowe Price Equity Index 500 Fund 

yes Index funds are safest of the investment. 

The list of differences between Index fund and ETF: 

• An index fund is a theoretical segment of the market as it represents large companies, small companies or the companies separated by industry. Whereas the ETFs is a basket of asset traded securities. 
• Index have no transaction fee/commission, but ETF does have a high trading cost. 
• Index funds are traded like Mutual Funds, whereas the ETF is traded like stocks. 

Investor always has concern about the selection of index funds vs stock. Which one will add more to their investment portfolio? The basic difference is when you buy shares of stock in individual businesses, you become the owner of the company, which basically means you get a proportional share of profit and losses depending upon the success and failure of the company. 

 When you buy an index fund, you are buying a basket of company shares under a certain index such as Dow Jones Industrial index and S&P 500. In effect, if the investor who buy the shares of index fund own shares of different companies indirectly. 

 It totally depends upon the investor to choose an index fund or saving account. Saving account is for those investors who want to take the minimum risk with their capital, whereas the index fund is for those who want to take risks with their capital. A savings account provides a rate of returns about 7%, whereas an index fund provides the rate of returns between 10% to 12 %. 

On an average the index fund returns for one-year time is between 12%to 14%.