No one wants to buy index funds
The concept of Index funds has not worked in India, at least not so far. They are super hit in countries like the USA but not in India. Vanguard in the USA, the largest mutual fund company, has all its products as index funds.
Further read: Founder of Vanguard, John Bogle’s 8 Rules to build your mutual fund portfolio
Less than 1% of the overall investments in equity mutual funds in India are in index funds. That says it all.
The one word that would come to anybody’s mind who is picking mutual funds is ‘performance‘, which again, for index funds, is nothing to write home about.
There are several ‘other funds‘ that have delivered much better returns. And is that not what we want – more returns?
The ‘other funds‘ are the ‘actively managed‘ funds compared to the ‘passively managed‘ index funds.
Having said that, there are some key benefits of using index funds as a part of a long-term portfolio. Let’s explore them here.