HomePersonal Finance NewsMoney Money Money: Should passive funds be part of your investment strategy?

Money Money Money: Should passive funds be part of your investment strategy?

Many AMCs are now launching new funds. This year itself, there were several NFOs and many of these funds are going beyond the plain vanilla Nifty-based or Sensex-based investing models.

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By CNBC-TV18 September 20, 2021, 7:11:15 PM IST (Updated)

Money Money Money: Should passive funds be part of your investment strategy?
Passive funds are coming of age in India. The debate over active investing and passive index investing is a long-standing one. Many AMCs are launching new funds. This year itself, there were several NFOs and many of these funds are going beyond the plain vanilla Nifty-based or Sensex-based investing models.


Read Here: Things to keep in mind before investing in a passive fund

In this episode of ‘Money Money Money’, the focus is on helping one develop an evolved and thought-out passive strategy for one's mutual fund portfolio. There are some basic questions - should one complicate it with a lot of newer strategies or should just keep it simple?

To answer these questions CNBC-TV18’s Surabhi Upadhyay spoke to Feroze Azeez, Deputy CEO of Anand Rathi Wealth Management.

Azeez said, “Passive is gaining momentum, like you rightly highlighted. It has grown as an industry not just in terms of the number of products which are being offered from 52 to 111 today only on the equity side, that is a very large jump almost 16-17 percent growth in the number of schemes. The startling bit is that there was only Rs 21,000 crore, which was there, which has now ballooned to almost Rs 3 lakh crore plus in the passive strategy. So it is a very important point to be highlighted to the viewer to look at passive.”

He added, “Should passive form a part of your strategy, is cost the only variable to be looked at? To my mind, if you break down passive into smaller components then it will be very easy to comprehend whether which part of the passive needs to form a part of your portfolio."

"Are all deserving a merit to infuse into your portfolio, the answer is no. Do all of them required to be ignored? The answer is no. So the answer lies somewhere in the middle. Because when you buy things, not just services, like fund management, cost is one of the variables, not the only variable. So there are some places where there is value and a cost efficiency, if that balance can be found out then it is a brilliant one.”

For full interview, watch accompanying video...
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