It’s Raining Index Funds, But How Do You Choose One?

Equity index funds (excluding factor funds) saw a compounded annual growth rate (CAGR) of 72 per cent in five years, with their assets under management (AUM) increasing from Rs 3,000 crore in January 2018 to Rs 45,000 crore in January 2023, according to data from Morningstar India. The number of index funds, too rose from 19 in January 2018 to 67 in January 2023, according to data from Morningstar India (excluding factor funds). In fact, 33 index funds were launched between 2021 and 2022. Along with the number, even the type of index funds have increased. From large-cap to mid-cap and small-cap to sectors such as banking, information technology, pharma and manufacturing, index funds are now pegged to key indices. That said, exchange-traded funds (ETFs), which are closely related to index funds, have been around in the sector space for many years. Growing Basket...