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The Index Plus Approach – Part 2

Remember my index plus approach blog? Never mind if you don’t recall. You can check it out here.

This gist of index plus approach – trying to better the returns generated by broad market indexing by following some “active” investment options.

Let’s check how this approach has done in the latest calendar year gone by (1 Jan 2025 – 1 Jan 2026). And rather than looking at index returns, we will check out index fund returns from a particular fund house (Motilal Oswal) as that gives an idea of actual return what an investor would have realized. Here are some numbers:

-          Nifty 500 Index fund: 6.57%, way below “general expectation of 12% to 15% returns

 

-          Nifty 50 Index fund:  10.89%. That’s more than 4% extra from Nifty 500 index fund. Underperformance by mid cap and small cap stocks pulled down Nifty 500 performance quite a bit

 

-          Nifty Bank Index fund: 16.72%. This sectoral fund beat both Nifty 500 and Nifty 50 by quite a margin. The expectation of high 15% return is met quite comfortably

An investor who took conscious call of taking some exposure in large cap (Nifty 50) and sectoral (Nifty Bank) index funds would have bettered the portfolio’s one year performance. That’s what index plus approach is all about!!!  

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