The debate over the suitability of passive mutual funds over active funds is getting more heated, of late. With growing evidence that fund managers of actively managed funds are struggling to deliver superior returns, many are now rooting for passive investing, through index funds or Exchange Traded Funds (ETFs)
Fund managers have no role to play in passive investing, thus reducing the expense charged to investors. The money is invested according to the composition of the index on which the fund is based. For instance, an index fund tracking the Nifty 50 will invest in the Nifty 50 stocks, following the same allocation pattern as the index.
