At time when stock market indices have been witnessing a broader uptick, it is getting difficult for actively managed funds to outperform the benchmark. Investors are increasingly looking at passive funds as these have outperformed actively managed funds and have low costs.
Individuals consider passive funds to be less risky as the investment happens predominantly in index companies which are selected based on market cap and volatility. The idea of a passive fund is not to beat the index through active stock selection but just to get returns as much as the index. The focus is purely on reducing the tracking error.
