How Passive fund works
The fund can still lag its benchmark because of expenses, cash, taxes, trading and replication choices. Index construction also embeds decisions, so passive does not mean risk-free, neutral or suitable for every goal.
An example
If the index returns 10% and the passive fund returns 9.6%, its realised tracking difference is minus 0.4 percentage points for that period.
Why it matters for your family
Choose the underlying index before comparing providers. For a family, broad exposure, tracking quality, liquidity and total cost matter more than the passive label alone.
Questions people ask
- What does Passive fund mean?
- A passive fund seeks to track a specified index or rules-based portfolio rather than have a manager choose securities to outperform it.
- Why does Passive fund matter for a family?
- Choose the underlying index before comparing providers. For a family, broad exposure, tracking quality, liquidity and total cost matter more than the passive label alone.
- Where can I verify information about Passive fund?
- Start with SEBI Investor, linked on this page, and the current official document for the product or tax year involved.