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What’s The Difference Between Index Funds And ETFs?

Confused between index funds and ETFs? Read this blog to find out how they’re different and what you should invest in.
April 18, 2024
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Busy professionals who don’t have the time to pick individual stocks have the option to invest in passive funds that track indices. This can give investors exposure to a whole index worth of stocks. 

Exchange Traded Funds (ETFs) and index funds fall under the category of passively managed investments. But wait… ETFs can be bought and sold like stocks but index funds can’t. 

Both ETFs and index funds have “fund” in their name. Then why exactly are they so different? Let’s find out by going through both index funds and ETFs in greater detail.

What Are Index Funds?

Index funds are mutual funds that generally track an index like Nifty, Nasdaq, or FTSE. They’re passively managed mutual funds that have a portfolio with multiple securities. 

The fund manager of an index fund will build a portfolio of stocks or bonds that mirror an index. After that, the fund manager will simply leave the index fund as it is to track the index and mirror the returns. You can also consult a Cube Wealth

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