What is Index Fund?
An index fund is a mutual fund or ETF that passively replicates a market index (like Nifty 50) at minimal cost — the simplest way to invest in the entire market.
Formula
Returns = Index Return - Tracking Error - Expense Ratio
How to Interpret
Index funds consistently outperform most active funds over long periods after fees. Ideal for beginners and as a core portfolio holding.
Typical Ranges
Expense ratio below 0.20%. Tracking error below 0.5%. Nifty 50 index funds are most popular in India.