INDEX FUNDS

INDEX FUNDS
Index funds are known as passive schemes because here the fund manager does not have to take active investment decisions regarding selection of companies for investment. The corpus of these schemes is invested in such a manner that it mimics an index that is being tracked by the fund. Thus for example a scheme tracking the Sensex will have its portfolio in the exact proportion that the 30 sensex scrips are in and hence the performance should mirror the behaviour of the index being tracked. At regular periods of time the portfolio is rebalanced so that any deviation is corrected. These are meant for investors who would like to ensure that their returns match that of a specified index