Passive equity funds for savers

Indians cling fiercely to physical assets, bank deposits, and small-savings investments. These are deep-rooted behaviours that are tough to shake off.

Recent household financial savings data from the RBI paints a startling picture: as of March 2023, a staggering 55% of financial assets held by Indian households were parked in bank deposits and other investments, including the Public Provident Fund.

Other investments are a slew of schemes that the government offers. Similar to bank deposits, investors receive an assured interest on the capital invested in these schemes.

While some of the traditional investments can be useful in accumulating capital, they are not sufficient for growing wealth.

For wealth creation, one can embrace equity exposure. To that end, mutual funds may be an attractive choice. And for those new to investing, passive funds may be a good starting point.

Passive funds simply track an underlying index and seek to generate returns as per that. They comprise index funds and exchange-traded funds/fund of funds.

For instance, the Nifty 50 Index consists of India's top 50 listed companies in terms of market capitalisation. By investing in passive funds tracking such an index, you may seek to get underlying index returns.

The views expressed here constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. The data/information/opinions are meant for general reading purposes only and are not meant to serve as a professional guide/investment advice for the readers. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investments. An investor education and awareness initiative by Mirae Asset Mutual Fund. All Mutual Fund investors have to go through a one-time KYC (Know Your Customer) process. Investors should deal only with Registered Mutual Funds (RMF). For further information on KYC, RMFs and procedure to lodge a complaint in case of any grievance, you may refer the Knowledge Center section available on the website of Mirae Asset Mutual Fund.

Mutual fund investments are subject to market risks, read all scheme related documents carefully.