ETF vs Index Fund: Which investment option is better?
As passive investing gains popularity, investors increasingly have to choose between two common routes — ETFs and index funds. Both seek to replicate an index at relatively low cost, but differ in how they are bought and sold, their liquidity and the convenience they offer for regular investing.
WHAT ARE PASSIVE FUNDS?
Passive funds are investment funds that track a market index, like the Nifty 50 or Sensex, instead of trying to beat the market. They buy the same stocks in the same amounts as the index. Common types include index funds and exchange-traded funds (ETFs). They are getting popular amongst investors due to their simplicity, low cost and no dependence on fund managers. As per AMFI Crisil Factbook 2026, passive funds share of total mutual fund AUM has nearly doubled from 9.8% in 2021 to 18.6% in 2026.
WHAT ARE PASSIVE FUNDS?
Passive funds are investment funds that track a market index, like the Nifty 50 or Sensex, instead of trying to beat the market. They buy the same stocks in the same amounts as the index. Common types include index funds and exchange-traded funds (ETFs). They are getting popular amongst investors due to their simplicity, low cost and no dependence on fund managers. As per AMFI Crisil Factbook 2026, passive funds share of total mutual fund AUM has nearly doubled from 9.8% in 2021 to 18.6% in 2026.
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