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Abstract

Investors worldwide adopt investment strategies based on their availability of time and return. There are mainly two investment strategies i.e., passive and active investment strategy. Index funds and ETFs follow passive investment style. The study is an attempt to find an appropriate investment option for those who make a decision with respect to their investment in Exchange Traded Funds or Index Funds. The tools used for analysis were t test, ANOVA and post hoc analysis. It was found that there is no difference in the performance of both the funds as regards return, systematic risk and benchmark return and there is difference when they are compared with benchmark risk. The performance of ETFs is better than Index funds as regards their growth, total risk, expense ratio, and tracking error. Thus, investing in ETFs is beneficial than Index funds

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