How to use Index Funds in your portfolio: Key advantages, drawbacks & advice by Dhirendra Kumar
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- เผยแพร่เมื่อ 21 ก.ย. 2024
- In this episode of Investors' Hangout, Dhirendra Kumar, CEO of Value Research, explains how to effectively use index funds in your portfolio. He answers key questions, including:
00:44 What are Index Funds?
01:47 What are the advantages and drawbacks of Index Funds?
04:21 How should investors incorporate index funds into their portfolio?
Discover how index funds offer simplicity, low costs, and broad market exposure, and learn the best strategies for using them to build long-term wealth.
If you're considering index funds for your investments, this session is a must-watch!
Viewers' Questions:
06:25 I am a 78-year-old mutual fund investor. My only son and his
family depend on my monthly pension of ₹1 lakh. Please explain how I can insert my son's name as a second holder instead of the nominee with an option of either or survivor, and add another nominee. This is to make easy transitions after my demise.
08:01 What is the best method to take a tactical call to benefit from the
likely ensuing interest rate cut? Should we invest in government
securities funds or long-duration funds now or through an STP for the next three to six months? I already have about ₹25 lakh invested in short-term debt funds for about three years, and the annual returns are about 5.5 to 6%.
09:00 Key Takeaways -
- Index funds mirror a market index, offering a portfolio of stocks in the same proportion, making it easy to match market returns.
- Simplicity, predictability, and low cost are key benefits of index funds, as they require no active management and track the index closely.
- Settling for average returns is a drawback, as index funds won’t outperform the market. Larger companies can dominate, and underperformers remain in the portfolio.
- Index funds are ideal for large-cap allocation, covering 40% to 70% of a portfolio. They provide cost savings and closely match market performance.
- Combine index funds with small-cap, multi-cap, and sectoral funds to balance low-cost stability with potential growth across market segments.
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Thanks for Watching - How to use Index Funds in your portfolio: Key advantages, drawbacks & advice by Dhirendra Kumar
Is there a fund with Momentum, Value and Growth. All in one.
Apart from largecap vs Nifty50 comparison, it would have been good if you would have given your views on Midcap active Vs Midcap Index, Smallcap active Vs Smallcap Index. Also these days there are few momentum index funds which claims to be back tested and give better performance then there index.
Agreed. It will be good if the VR team could include factor based funds in this comparison to make it a more comprehensive analysis of active & passive funds.
Momentum based are very very volatile. If one can stay the course then they are good. Btw midcap index fund have outperformed 80% of active mid and small cap funds.
@@asinghal77 Duly noted! We’ll certainly look into it.
Can you please make a video on performane of dedt funds in case the interest rates are reduced by the RBI. I am a senior citizen and wish to invest in debt funds.
Thanks & Regards,
H P Joshi
Thankyou Dhirnder sir.
Always welcome
75% of my portfolio is of Index funds including Smart Beta Index funds as the time goes it will be harder and harder to beat Indices for active fund managers just like in US. Active largecaps have already started to underperform.
Can we use equal watage index fund?
Good advice
@@jogeshwarbajpai7324 Happy to help!
👌👌👌
Nifty 500 momentum 50 index fund is recently came to NFO. is it good?
Yes. My observation. Someone add/correct.
Good long term.
But the volatility is high. In bear market there will not be momentum in any stocks. Existing momentum stocks in this index see high profit booking as they run up high. Proceed based on your goal not just for gains.
Having value or low volatility funds give cushion during fall. Then again if you have both momentum and value then the returns will be more or less similar to Nifty 50 funds.
I did not invest in this NFO yet. Will track them during down market and take decision.
Can someone invest in momentum based passive fund ? Even if already have active fund? ❤
Yes but remember even nifty 200 momentum 30 is more volatile than a small cap index. Bear market will be a pain to go through
If someone doesn't appreciate that it is impossible today to identify a future winner active fund, better not to pick passive funds. At any point of time some active funds of a given category will beat underlying index and rest are not. Active management is an added risk on the top of usual risk in equity investment.
but in another vid you supported index fund, where you told its difficult to spot winner fund manager,
please explain
10 yr + period active funds beating index funds are significantly higher. It's the short 3 and 5 yr bullmarket phase which shows up index did better because everything will be shooting up..but then when market crash the same stocks will crash that's where active funds can reduce the fall by adding debt, allocating some part to low vol shares etc. so this lower volatility will help in the long run.
@@jishnu18 also I trust wisdom of selective fund manager (read AMC), that is why i have a simple portfolio of Parag Parikh ELSS, one large and mid cap and two small caps for mid term consumption oriented one debt and one Hybrid fund (icici equity and debt)
works for me thats it
@@yogisharmamagic70 where do I contradict?
@@jishnu18 do you know the future winners now?