Index funds are passively managed mutual funds. They simply invest in the same proportion and composition of an underlying index like Nifty or sensex.
While a Nifty Index fund invests in NSE's top 50 stocks, a Sensex Index fund invests in BSE's top 30 stocks. Eitherway, all these stocks are large cap stocks only. And the beauty is many crucial sectors like transportation, textile, agri commodities donot find a place either in NSE or in BSE. As a result investments made in such index were actually skipping the performance of crucial sectors.
Atlast, we now have a index fund which would invest in top 500 shares of BSE. Called as Benchmark S&P 500 fund, it is an open ended equity fund traded as ETF on NSE stock exchange. A details article on this subject is attached. Investors looking forward to participate in some midcap and small cap space can look into this fund.
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