Mutual index funds are collective investment schemes that generally imitate the movement of an index of a definite financial market irrespective of the market condition. This is a type of mutual fund that has a portfolio. This portfolio is designed to track all the vital components of the market index mainly Standard & Poor's 500 Index.
Mutual index funds are passive forms of managing the fund that is known to outperform some of the mutual funds which are actively managed. Today some of the major financial institutions like ICICI, HDFC and SBI are offering mutual index funds, which are meant to offer financial security to a person. The various funds that are presently operating in the market are as follows:
1.HDFC Mutual Index Funds – This investment plan from HDFC has been designed to generate assured returns on investment, which are proportionate to the performance of Nifty. Here the money is invested in stocks mainly in S&P CNX Nifty. Some portions of the net assets are also invested in instruments of money market that are permitted by SEBI or Securities and Exchange Board of India.
2.SBI Mutual Index Fund – This is one scheme that uses investment strategy in a passive way. According to this scheme, the investment is done in stocks that comprise the S&P CNX Nifty index. The investment is done in same proportion as in the index in order to achieve returns, which is similar to the Total Returns Index of S&P CNX Nifty index. Due to this the performance difference between the benchmark scheme and the index is minimized.
3.Franklin Templeton Mutual Index Fund - This is the well known fund management company that is well known for doing extensive research for identifying the best growth sectors. The invest plan that they are currently offering to their investors is the Franklin Flex Cap Growth Fund. This investment was launched in the market in the year 1991 and is still going strong. The main objective of this fund is to offer the growth or appreciation of capital.