Relevance of Investing in Index Funds to beat the Market Volatility in the Context of Indian Capital Market
It is a known fact that Capital Market is unpredictable because of the various underlying factors relating to Industry as well as the Economy. Mutual funds provide an opportunity to small investors to invest their limited resources in the capital market and to obtain benefits arising out of it with their limited funds and without taking direct dip in the capital market. Instead of small investors it is the fund managers who take the decision relating to the time of investment and withdrawal of investment by using their expertise in the capital market. Various market indices indicate the way the market moves. Index Funds mirror the securities in a specified index. Index funds are such categories of mutual funds which invest in the same shares indexed in the particular index and in the same weightage of the shares forming the index. For example a Nifty Index Fund will contain the same stocks in same proportion as there in the Nifty.
The paper studies the performance of Index funds as compared to index which it mirrors and tries to find out their relevance for the common investors.