- Index funds provide exposure to a broad slice of the market, such as the NIFTY 50 representing 50 major companies in India.
- Offers protection against extreme fluctuations seen in individual stocks.
- Indexes cover various sectors of the economy.
- Investing in funds tracking diverse sectors mitigates risk associated with industry-specific downturns.
- Performance of underperforming sectors is balanced by positive performance in others.
- Index funds include multiple stocks, reducing risk associated with poor individual stock performance.
- Impact of underperforming stocks is diluted across the entire index.
- Index funds typically have lower management fees than actively managed funds.
- Reduced fees lead to higher overall returns for investors, bolstering portfolio stability.