November 16, 2010 2:13 pm
On of the newspaper in their funds review column, they always add an index fund (like Benchmark S&P 500) in their suggested portfolio. Could you guys comment on this?
As suggested by Manish, Index Funds are a hassle-free way of investing in mutual funds. You get to invest in leading companies across the spectrum, without an active fund management. In India, however, actively managed MFs have given better returns than the Index Funds in the past.
So, you may consider investing a small part of your investment in Index funds. You may also consider SIP in ETFs for the same.
I’ve a very small % in “Benchmark S&P 500” in SIP mode. I may not renew my SIP.
In the news paper that I mentioned in my question – was a portfolio suggestion to a 35 year old
“Try and add a 20% exposure to an index fund. That’s your insurance against your active fund failing to beat the indices over the long term. The Benchmark S&P 500, tracking the broad market, would be a good bet”
Not sure if you got your answer or not ! .. Index funds are hassle free way of investing in Index , unlike mutual funds you dont have to worry about fund management etc .
So they put one of the index funds in their suggested portfolio , but in no way if makes a strong reason that you also add it , if you are an active investor better keep away from ETF’s or Index funds and invest through mutual funds only (assuming you are an active investor and keep track of things )
In my opinion, the ETF in India still have relatively high expense ratios and the variety is not there. Hence, at present not a very attractive option for me.
Is there any particular reason why you have recommended the Nifty/Sensex index fund instead of the more diversified S&P 500 index fund?
That is just a personal choice, I rather have an Index that is tracking the main indexes. Although some people like a broader index like the S&P 500.
Benchmark S&P 500 is one of many index funds available. If you are going to add an index fund, I would add either one that tracks the Sensex or Nifty.
Benchmark has the Nifty BeES
Kotak has a Sensex and a Nifty ETF
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