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What Is Passive Investing? |
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Answer» This is the investment STYLE espoused by index FUND managers who simply INVEST by benchmarking their portfolio to a common stockmarket index like the BSE-30 or the SP CNX-50. The fund manager only INVESTS in stocks in the index in exactly the same proportion. There is no attempt to beat the benchmark index, but to simply replicate it, and therefore it is called as passive investing. The index fund will never outperform the benchmark index, nor does it attempt to. This is the investment style espoused by index fund managers who simply invest by benchmarking their portfolio to a common stockmarket index like the BSE-30 or the SP CNX-50. The fund manager only invests in stocks in the index in exactly the same proportion. There is no attempt to beat the benchmark index, but to simply replicate it, and therefore it is called as passive investing. The index fund will never outperform the benchmark index, nor does it attempt to. |
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