ACTIVELY PASSIVE

LET’S LOOK at two sets of indices.

The first set comprises S&P BSE Sensex, Nifty, S&P BSE 500, Nifty Bank, S&P BSE Midcap and Nifty Next 50. The second set has benchmarks such as MSCI World Index, Indxx Blockchain Index, S&P U.S. IPO & Spinoff Index, S&P Kensho Electric Vehicles Index, Solactive Autonomous & Electric Vehicles Index and STOXX Global Electric Vehicles & Driving Technology NET Index.

Most mutual fund investors would be aware of the first set and would have at least one or two funds in their portfolios that would be benchmarked to these indices. The set comprises some of the most popular benchmarks, which have been in the market for long.

However, it is the second set which is in the news right now even though not many are aware of the benchmarks and the companies that are a part of these indices. Interestingly, these are global indices and typically have companies from various countries, but have suddenly become accessible to all Indian retail investors.

So what exactly has changed?

In a nutshell, the world of passive investments, or passive funds, has opened up like never before. It started with new-age fund houses such as Navi Mutual Fund or Zerodha Mutual Fund, but traditional fund houses have been quick to catch up too. Simply put, passive funds are funds that replicate a particular index or benchmark. Index funds or exchange-traded funds (ETF) are the most popular examples of passive funds. For example, a Nifty Index