May 6, 2013 11:34 am
I want to start SIP in one of the index funds. I want to understand what are the risks or things that needs to be considered before i put in my money into it..
Dear Ramesh, thanks for the clarification. 🙂
Dear Rajan, please invest in your choice of funds.
Thanks ashal for clarifying..
I meant to invest in the normal funds..
Dear Rajan, there are 2 kinds of Index funds in India. Exchange Traded funds & normal funds.
You can SIP in normal funds but not in exchange funds. That’s what I mean.
HDFC sensex plus is a normal Index fund.
Goldman Sachs Nifty Equity Trading Scheme is an exchange traded fund.
Sorry for correcting. HDFC Sensex is an index fund, Sensex Plus is not – its an active fund.
you mean I can’t do an SIP in an index funds? and for your information I want to learn about it before I start investing..so I’m not jumping in 🙂
Dear Rajan, you said SIP, it means you want to invest in an active index fund & not a passive Index fund. Please make sure of your choices before jumping in.
I just want invest some amount and see how it fares.
The same risk as any equity fund.
All equity investing should be done only for long durations. When investing in index funds one will get returns lower than many actively managed funds. You should be ready to accept this.
When the market neither goes up or down the fund will also behave similarly. On the other hand a good fund like Quantum long term equity will get better returns (eg. bet. 2009-present)
Advantages of index funds :
1. are low expense ratios.
2. There is no need to change the fund unlike an active fund. Since there is no question of underperforming the benchmark in this case.
3. There is no sector specific risk and fund manager approach risk.
May I ask why you want to invest in an index fund?
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