Active vs Passive Funds | #financeshorts #mutualfunds #sipinindia

There's a lot of debate that goes on - active vs passive index funds. But almost no one understands the difference between the two. Let's understand this. first is active funds. Here you have a fund manager a real person who's doing deep research on every single company. Let's say if he's managing a large cap fund then He will sit down and study HDFC Bank's numbers he will understand the business, and then decide if it is worth putting money into? And if yes, then how much? If he's very confident he will allocate maybe 8–10% but If he likes it but is not fully sure then maybe just 2–3%. Every decision is his call. That's why it's called active. second passive funds and this is where it gets interesting. There's no research here. No number crunching. Nothing like that. NSE Indices publishes a list that these are the companies and this is how much weight each one gets. And the mutual fund company just buys exactly that. No thinking, no judgment. Honestly it's so straightforward that a 4th standard kid could technically manage one of these funds. Same goal. Completely different worlds. And both have their own pros and cons. - Disclaimer: Total Finserv Private Limited is an AMFI-registered Mutual Fund Distributor (ARN-253462). We facilitate transactions in stocks and mutual funds as per regulatory guidelines. The information shared on this platform is for informational purposes only and should not be considered as investment advice or a recommendation to buy or sell any securities or mutual fund schemes. Investments in securities markets and mutual funds are subject to market risks. Please read all scheme related and statutory documents carefully before investing. Past performance is not indicative of future results, and we do not guarantee or assure any returns on investments.