There are several options to invest in index funds. It can be done through online portals, agents, demat account and AMC website.
Index funds are the type of mutual funds which invests in stocks of a market index. The composition of the portfolio is exactly the replica of an index in term of weight age and stocks. Hence, the return from index funds will be in the same line of the index. In this post, we look at various options on how to invest in Index Funds in India.
Analysis of index funds doesn't require deep digging of the fund's performance or portfolio composition. But there are few factors which affect the performance of the fund that should be looked upon for determination of the future performance of fund following points should be checked.
*** Sector weight age:** It is important to know which sector has maximum influence on the fund and to what extent it is going to effect it. We should calculate the contribution of each sector of the fund by multiplying the sector weight by the sector return
We should check the tracking error of the fund. Tracking error means the difference between a portfolio's returns and the index. High tracking error means the fund is deviating from its portfolio and should be avoided.
There are multiple ways, an investor can opt for investing in Index Funds:
With the advent of Robo-advisors, investment in mutual funds are more efficient and focussed towards achieving financial goals more effectively. It uses set of algorithms, data analysis in suggesting the right fund to investors. Some pros and cons of Online portals are:
These are Independent financial advisor (IFA), helps an investor with managing financial goals, investment needs, recommends mutual funds and finally helps to buy them. Investing through IFA is ideal for investors who don't have knowledge of financial planning. Some pros and cons of IFA are:
One can invest in mutual funds through the Demat account also. Your online portal or an agent can open an demat account as well for your investments. Some pros and cons are:
One can invest in their pre-selected funds through official website of Asset management company. Pros and cons of investing directly through AMC are:
Investing in abroad markets has become quite easy these days. One can get direct and indirect exposure into the U.S. market through various methods. Investing in foreign markets like the U.S provides many benefits like Diversification into the top companies of the world, Benefit of Currency Depreciation, etc. Apart from directly purchasing the stocks listed on the U.S. stock exchanges, there are some different methods as well. Know the best methods of getting exposure to the U.S. stock markets.
Exchange traded fund is a freely marketable security which tracks a particular index, commodity, bonds or combination of assets. they aren't popular as there is no additional tax incentives, not enough liquidity, under performs most of the time, lack of choices, lack of institutional interest, costs are low but not enough and lack of awareness.
The Mirae Asset NYSE FANG Plus ETF Fund is a good option for Investors who want foreign exposure. The Equity allocation is very concentrated to just 10 stocks which makes this ETF very volatile and risky. This ETF consists of the top 10 stocks in their respective sectors mostly TECH, like Amazon, Netflix. Facebook, etc. Hence Investors with high-risk tolerance and a long time period should consider this fund.
Yes, any NRI can invest in mutual funds in India, if they follow some certain conditions under Foreign Exchange Management Act or FEMA Act 1999.
NRIs living in the United States can invest in Indian Mutual Funds, but there are some hassles that have to be overcome. You will require an NRE, NRO, or FCRN account in order to convert the foreign currency into Indian rupees, post which you can complete the KYC and begin investing in Indian Mutual Funds.
We all look to earn good returns on the money we invest. Putting money in High return investments is one way of generating better income. The different places to get good returns are mutual funds, equity, and gold investment in India.
No, a Demat account is not required to invest in mutual funds in India. Instead, there are a number of other options, such as Asset Management Companies (AMCs) or offline distributors through which you can directly invest in mutual funds without opening a demat account.
Yes, Overseas Citizens of India (OCI) can invest in Indian mutual funds. Checkout ways how an OCI can start investing in the Indian mutual fund industry.
Yes, foreign nationals can invest in Indian mutual funds. They can either invest by direct route, which requires them to open a demat account, or by indirect route through Unit Confirmation Receipts (UCR).
Mutual funds are professionally managed investment vehicles that offer numerous categories of funds to investors. To generate regular cash flows or income, investors can use the Systematic Withdrawal Plan or invest in Dividend Payout and Debt funds to receive regular income. Debt funds provide regular interest payouts, whereas dividend payout funds give regular dividends which act as regular income.