Shyam has just started his financial journey and has heard about equity investing through friends and colleagues but is overwhelmed with the choices of stocks and mutual funds. As a beginner, he is eager to find a simple and easy way to begin equity investing.
Fixed deposits and savings bank account with no exposure to equities.
Jaya understands the potential of investing in equity but has exposure to stocks only belonging to the industry she is working in or the ones recommended by her colleagues. Considering she is occupied with office and home routines, she does not have enough time for research. She is looking to expand her equity portfolio, and is in need of an equity investment option which is fairly modular.
Heavily tilted towards fixed income products with comparatively lesser exposure to direct stocks and mutual funds
Mr. Shah is a retired investor who is paying for his expenses from his lifelong savings, which are majorly invested in Fixed Income securities. With interest rates falling, his monthly cash inflows are reducing. He understands the need to increase his exposure to equities to enhance his income. He is looking at a strategy which can help give his portfolio steady growth, all this with the lowest possible cost.
Majority invested in relatively less risky fixed income securities
John is an experienced and evolved investor. Over the years, he has accumulated many mutual funds in his portfolio. In his investment journey, he has realized that some funds beat the broad market and some do not. He is now considering consolidating a component of his portfolio to a strategy which is aligned with the market while investing in some strategies which offer distinct themes and strategies.
Well balanced between different asset classes
Get in it for the long haul with INDEX INVESTING
The most common strategy of passive investing is to participate in the overall trajectory of the market
What is an INDEX?
A stock market index is a measure of the relative value of a group of stocks in numerical terms. The two major Indian stock market indices are Nifty 50 and BSE Sensex.
Let’s take the example of a Fund tracking Nifty 50
It holds Nifty 50 stocks in the same proportion as the Index and mirrors
the movements of the benchmark.
Nifty 50 goes up
Fund Value goes up
Nifty 50 goes down
Fund Value goes down
The fund manager, unlike in active funds, does not actively decide what securities the fund invests in. This means that only minor, periodic adjustments are made to keep the fund in line with the index or the market segment that it is tracking.
This also means that the proportion of gains or losses on the fund are approximately equal to the proportion of gains or losses on Nifty 50 Index*.
*The difference between Index returns and Passive fund returns can be attributed to Tracking Error. This reflects the expense of managing the fund, cash flow of the fund, and the cost incurred in realigning the portfolio when index composition changes.
Beginners can familiarize themselves with the equity asset class with Passive Funds that generate index-linked returns.
Structured equity exposure with reduced impact of any particular stock or sector on portfolio risk and returns.
Passive investing is a cost-effective route to a diversified equity market exposure.
Complement existing asset allocation with an investment passively tracking the overall market trajectory.
ETFs combine the range of a diversified portfolio with the simplicity of trading on a single security. ETFs are in dematerialized form and are settled like any other share listed on the stock exchange in T+2 days.
ETFs can be bought and sold at any time during trading hours at real-time prices like stocks instead of the end-of-day prices.
You can invest in ETFs through your existing stock broker, or open a demat account with a broker. Larger investments can be transacted directly with the Mutual Fund.
In addition to demat charges, investors pay brokerage to the stock broker at the time of purchase and sale.
Log in to your trading/
Select the ETF of
Make the investment
Investment in an Index Fund is the same as investing in any Mutual Fund. You may visit the Mutual Fund website or contact your distributor.
Like investing in an ETF, any one Index Fund too can provide diversification across various stocks or sectors.
Net Asset Value (NAV)
While the NAV of ETFs fluctuate with every trade, Index Mutual Funds compute and disclose NAV only once, at the end of the day.
There is no brokerage cost at the time of purchase and sale. However, this may be replaced by custody and administration costs.
Contact your distributor or log in to an AMC website
Select the Index Fund
of your choice
Make the investment
An investor education initiative.
To complete KYC process, investors are required to submit CKYC form along with a recent photograph, self-attested copy of PAN Card and valid address proof to any designated KYC Point of Service. For more information on KYC along with procedure to change address / bank details / phone numbers, etc please visit IDFC Mutual Fund website i.e. www.idfcmf.com. Investors can file their complaints with the mutual fund through their designated investor service contact points. Alternatively, investors can write to us at firstname.lastname@example.org or Call us on 1800 266 6688/ 1800 300 666 88. Investors may also register their complaint on SEBI SCORES portal. Investors are cautioned to deal only with the Mutual Funds registered with SEBI, details of which can be verified on the SEBI website under “Intermediaries/Market Infrastructure Institutions”. For more information, please click here.
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Mutual Fund investments are subject to market risks, read all scheme related documents carefully.