BAJAJ FINSERV ASSET MANAGEMENT LIMITED.
Grow your wealth over time with Bajaj Finserv AMC’s Index Funds. Get access to diversified, cost-effective investing.
Our schemes follow diverse investment strategies like megatrend investing, moat investing and more
AdvantageAll investments are driven by our in-house investment philosophy, InQuBe, a combination of the Information Edge, Quantitative Edge and Behavioural Edge.
Through our unique investment approach, we aim for market-beating returns in the long term.
SIP and lumpsum options in many schemes start with as little as Rs. 500
Rather than seeking to beat the market, index funds seek to match its performance (subject to tracking error).
Index funds thus offer investors an easy-to-understand and cost-effective way to potentially build wealth over time.
Index funds offer a simple and efficient way to participate in market growth. Here are some key advantages:
Before investing in index mutual funds, it’s important to assess the following factors to ensure they align with your financial goals:
1. Identify the type of index fund: This may be a broad market index fund, a bond index fund, a strategy index fund or a sectoral index fund, among others.
2. Select a scheme:Identify the various asset management companies offering the scheme. Assess the company’s credentials and compare schemes based on tracking error, expense ratio and the fund manager’s track record.
3. Choose between lumpsum and SIP: Make a one-time lumpsum investment or invest in installments through a Systematic Investment Plan (SIP).
4. Make the investment: You can invest directly through the asset management company offering the scheme or through a mutual fund distributor.
Taxation on index mutual funds in India depends on the type of index the fund tracks:
1. Equity-oriented index funds
2. Debt-oriented index funds
For investments made after April 1, 2023, all gains are deemed to be STCG and taxed as per the investor’s applicable slab rates.
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An index fund is a type of mutual fund that tracks a specific market index, like the Nifty 50 or BSE Sensex. The fund portfolio mirrors the composition of the index and seeks to match its performance (subject to tracking error).
Index funds can be suitable for beginners because they offer diversification and are cost effective compared to actively managed funds. Moreover, the investment approach is easy to understand.
No mutual funds guarantee returns. The potential returns on an index fund depend on that of the benchmark index, which in turn is influenced by market conditions. Volatility can be high and even losses are possible, particularly in the short term. .
You can invest through a mutual fund house or through a distributor, either as a lump sum or via SIP. You can also invest through aggregator platforms.
Both track indices, but ETFs trade like stocks, while index mutual funds are bought and sold directly through the asset management company at the day-end net asset value.
Equity-oriented index funds can be suitable for long-term wealth creation potential because of their cost-effectiveness and the power of compounding.
Index funds do well in growing markets but can decline during market downturns, just like the index they track.
Index funds aim to mirror the market, not beat it. This means they may underperform actively managed funds in certain market phases. They also carry market risk, as they move in line with the index.
Returns from index funds generally reflect the performance of the underlying index. While historical data offers some insight, actual returns can vary depending on market conditions and the fund’s tracking efficiency.
*Past performance may or may not sustain in future.
Some index funds offer Income distribution cum capital withdrawal (IDCW) payout or reinvestment options, depending on the scheme. However, IDCW payouts are not guaranteed and depend on the IDCW policy of the underlying companies in the index.
The amount you invest should be based on your financial goals, time horizon, and risk profile. It’s best to consult a financial advisor to determine what allocation works best for your portfolio.
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Our Investment Philosophy reflects what we, as an organisation, believe will generate a good return on equity investment for our investors in the long term. It dictates our goals and guides decision making.
Alpha (a) is a term used in investing to describe an investment strategy’s ability to beat the market.
Alpha is thus also often referred to as excess return or the abnormal rate of return in relation to a benchmark, when adjusted for risk. Essentially, it means doing better than the crowd without taking disproportionate risk.
Collecting superior information
Analysts and portfolio managers strive to collect superior information about the business and the management of the company. They try to generate superior earnings forecast and the balance strength of the company and the industry, thereby trying to 'beat the market' on information edge. This is an important source of alpha for an investor. However, over the years, retaining the information edge has become more difficult and expensive. With a whole lot of investors trying to collect superior information, how can an investor be sure to continuously have accurate and material information about the companies, ahead of others, all the time?
Processing information better
Even if you don't have material information earlier than the crowd, you can still generate better outcomes if you are able to process this information better. Investors develop models and algorithms with enhanced predictive powers to forecast the next move. Fund managers who invest based on some pure formal analytical models are quantitative managers. Here, the goal is to try and beat other investors based on the sophistication of procedures or analytics. The analytical edge can be quite useful until it gets copied by many, and then it may stop generating superior returns.
Exploiting behavioural biases
As the name suggests, this edge is achieved by superior behaviour in reacting to the inputs available to maximise alpha. Modern finance assumes people behave with extreme rationality. However, researchers in behavioural finance have shown that this is not true. Moreover, these deviations from rationality are often systematic. Behavioural managers try to exploit situations where securities are mispriced by the market because of behavioural factors. At Bajaj Finserv AMC, we endeavour to combine the best of these edges.
