{"id":3728,"date":"2025-03-21T17:04:26","date_gmt":"2025-03-21T11:34:26","guid":{"rendered":"https:\/\/www.torusdigital.com\/toruscope\/?p=3728"},"modified":"2025-04-01T13:29:17","modified_gmt":"2025-04-01T07:59:17","slug":"mutual-vs-index-funds","status":"publish","type":"post","link":"https:\/\/www.torusdigital.com\/toruscope\/mutual-funds\/mutual-vs-index-funds\/","title":{"rendered":"Mutual vs Index Funds: What Is the Difference?"},"content":{"rendered":"<div class=\"wpb-content-wrapper\"><p>[vc_section el_id=&#8221;blog-inner-layout&#8221;][vc_row overlay_dotted=&#8221;&#8221;][vc_column el_class=&#8221;blog_primary&#8221;][vc_row_inner][vc_column_inner][vc_column_text css=&#8221;&#8221;]<span style=\"font-weight: 400;\">When you are looking for different investment options in the stock market, you may have heard the terms \u201c<\/span><a href=\"https:\/\/www.torusdigital.com\/mutual-funds\"><b>mutual fund<\/b><\/a><span style=\"font-weight: 400;\">\u201d and \u201c<\/span><a href=\"https:\/\/www.torusdigital.com\/mutual-funds\/index-funds\"><span style=\"font-weight: 400;\">index fund<\/span><\/a><span style=\"font-weight: 400;\">\u201d. While some people use them interchangeably, they are not the same.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There are two types of mutual funds: actively managed mutual funds and passively managed funds.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In actively managed funds, the fund managers try to outperform the benchmark returns. On the other hand, a fund manager of a passive fund follows a specific index, and that is why it is also known as an index fund.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this blog, you will learn all such information, including their advantages, how you can invest and <\/span><b>index vs mutual funds<\/b><span style=\"font-weight: 400;\">. Let us get started.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Meaning_of_Index_Funds\"><\/span><b>Meaning of Index Funds<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">An Index Fund aims to replicate the performance of a specific stock market index such as the <\/span><a href=\"https:\/\/www.torusdigital.com\/indices\/nifty-50\"><b>Nifty 50<\/b><\/a><span style=\"font-weight: 400;\"> or <\/span><a href=\"https:\/\/www.torusdigital.com\/indices\/bse-sensex\"><b>BSE Sensex<\/b><\/a><span style=\"font-weight: 400;\">. To do so, the fund managers invest in the same stocks in the index in the same proportions.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The fund managers passively manage these funds, which means the fund manager does not alter the portfolio composition but simply mirrors the securities within the underlying index. The goal is to deliver returns that closely match the performance of the tracked index.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Advantages_of_Investing_in_Index_Funds\"><\/span><b>Advantages of Investing in Index Funds<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Let us know the advantages of investing in index funds before going deep about <\/span><b>index vs mutual funds<\/b><span style=\"font-weight: 400;\">:<\/span><\/p>\n<ul>\n<li aria-level=\"1\">\n<h3><span class=\"ez-toc-section\" id=\"No_Fund_Manager_Bias\"><\/span><b>No Fund Manager Bias<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">In actively managed funds, the fund manager selects stocks based on personal judgment, which can introduce bias. On the other hand, index funds follow the exact stock composition of a specific market index, which eliminates any bias from the fund manager.<\/span><\/p>\n<ul>\n<li aria-level=\"1\">\n<h3><span class=\"ez-toc-section\" id=\"Lower_Costs\"><\/span><b>Lower Costs<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Active funds require a team of analysts and frequent trading, which increases the expense ratio. Index funds are cheaper because they track an index and require minimal buying or selling, which leads to lower costs and fees.<\/span><\/p>\n<ul>\n<li aria-level=\"1\">\n<h3><span class=\"ez-toc-section\" id=\"Diversification\"><\/span><b>Diversification<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Index funds provide exposure to a variety of sectors and reduce the risk of putting all your money into one share. Even if you choose a large-cap or small-cap index, your investment is spread across many companies and sectors.<\/span><\/p>\n<ul>\n<li aria-level=\"1\">\n<h3><span class=\"ez-toc-section\" id=\"Convenient_and_Professionally_Managed\"><\/span><b>Convenient and Professionally Managed<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Even though index funds are passively managed, they are still professionally managed to ensure that investments are handled according to the fund&#8217;s objectives. They provide an easy and hassle-free way for investors to make long-term, diversified investments in your preferred index.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Easy_Steps_To_Invest_in_Index_Funds\"><\/span><b>Easy Steps To Invest in Index Funds\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">If you want to invest in index funds, you can follow these steps:<\/span><\/p>\n<ul>\n<li aria-level=\"1\"><b>Choose an Index Fund: <\/b><span style=\"font-weight: 400;\">Start by selecting an index fund that aligns with your investment goals. Decide which index you want to track, such as Nifty 50, Sensex, or Nifty Next 50. Compare different funds based on expense ratio, tracking error and past performance.<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-level=\"1\"><b>Select an Investment Platform: <\/b><span style=\"font-weight: 400;\">You can invest directly through mutual fund houses, online platforms such as Torus Digital, banks, or stockbrokers for ETFs. It is best to choose direct mutual funds over regular funds to save your expense ratio.\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-level=\"1\"><b>Create a Demat Account and Complete KYC:<\/b><span style=\"font-weight: 400;\"> For the first time, you have to create a Demat account and submit identity proof, address proof, and a photograph. This can be done online seamlessly through Torus Digital.\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-level=\"1\"><b>Choose Investment Type:<\/b><span style=\"font-weight: 400;\"> There are two different ways to invest in an index fund\u2013 a lump sum investment or a Systematic Investment Plan (SIP) for regular contributions. If you are looking for a long-term investment, you may prefer SIP.<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-level=\"1\"><b>Place Your Order: <\/b><span style=\"font-weight: 400;\">You can place a new SIP or lumpsum investment order anytime. In SIP mode, you can edit, cancel or modify your SIP amount and dates anytime.\u00a0<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Meaning_of_Mutual_Funds\"><\/span><b>Meaning of Mutual Funds<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Before diving into the comparison between <\/span><b>index vs mutual funds<\/b><span style=\"font-weight: 400;\">, it is essential to understand what mutual funds are. It is an investment option managed by professionals which gathers money from multiple investors to create a pool to invest in a diversified portfolio of assets, including stocks, bonds, or money market instruments.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This pooled investment strategy allows investors to benefit from expert management and diversification and also to minimise risk. The income generated by the fund is distributed to investors in proportion to their holdings, based on the fund&#8217;s Net Asset Value (NAV).\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Advantages_of_Mutual_Funds\"><\/span><b>Advantages of Mutual Funds<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">These are the advantages of investing in mutual funds for investors:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Compounding Benefits: <\/b><span style=\"font-weight: 400;\">By investing in growth mutual funds, your investment amount will grow over time, enabling wealth accumulation that outpaces inflation. You can do it even with small SIP investments.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Professional Management:<\/b><span style=\"font-weight: 400;\"> Mutual fund managers offer expertise in stock selection and asset allocation to manage investments effectively with their research and market knowledge.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Low Costs:<\/b><span style=\"font-weight: 400;\"> You can start SIPs online instantly. Mutual funds have minimal brokerage charges and small expense ratios, which enables retail investors to start with investments as low as \u20b9100.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Rupee Cost Averaging:<\/b><span style=\"font-weight: 400;\"> With SIP investments, you can take advantage of rupee cost averaging by purchasing more units when the market is low and fewer units when it is high. It helps to maximise your returns in the long run.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Ways_to_Invest_in_Mutual_Funds_in_2025\"><\/span><b>Ways to Invest in Mutual Funds in 2025<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">If you are looking to invest in mutual funds in 2025, these are multiple channels:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Mutual Fund Distributors: <\/b><span style=\"font-weight: 400;\">AMFI-registered distributors offer advice and handle transactions, but the costs are higher for regular plans.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Direct Investment with AMCs:<\/b><span style=\"font-weight: 400;\"> You can invest directly through Asset Management Companies (AMCs) for lower fees, which is ideal if you are an experienced investor.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Registered Investment Advisors (RIA):<\/b><span style=\"font-weight: 400;\"> You can invest in direct plans through RIAs but may charge fees for guidance.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Stockbrokers:<\/b><span style=\"font-weight: 400;\"> Invest through stockbrokers offering mutual fund services.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Online Platforms: <\/b><span style=\"font-weight: 400;\">Use trusted platforms like Torus Digital to explore, and invest in various types of mutual funds.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Bank Wealth Management: <\/b><span style=\"font-weight: 400;\">Banks provide mutual fund investments, but these are mainly regular plans.<\/span><\/li>\n<\/ol>\n<h2><span class=\"ez-toc-section\" id=\"What_Are_the_Difference_Between_Mutual_Funds_and_Index_Funds\"><\/span><b>What Are the Difference Between Mutual Funds and Index Funds?\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Follow this table to learn the difference between <\/span><b>index vs mutual funds<\/b><span style=\"font-weight: 400;\">:<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Feature<\/b><\/td>\n<td><b>Index Funds<\/b><\/td>\n<td><b>Mutual Funds<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Objective<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Index funds match the returns of a specific market index.<\/span><\/td>\n<td><span style=\"font-weight: 400;\">It aims to outperform a benchmark index through active management.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Management<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Here, fund managers passively manage to mirror a specific index.<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Here, your fund managers actively manage your investment and select securities.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Holdings<\/span><\/td>\n<td><span style=\"font-weight: 400;\">An index fund replicates the index by holding all its securities in the same proportion as the index.<\/span><\/td>\n<td><span style=\"font-weight: 400;\">In the holdings, the fund manager invests in a dynamic and varied portfolio of stocks, bonds, or other assets.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Expense Ratio<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Lower expense ratios due to passive management.<\/span><\/td>\n<td><span style=\"font-weight: 400;\">It has higher expense ratios as it requires active management and research.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Risk<\/span><\/td>\n<td><span style=\"font-weight: 400;\">The risk is lower as your investment is diversified across the index.<\/span><\/td>\n<td><span style=\"font-weight: 400;\">It has a higher risk due to stocks chosen by your fund manager.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"Index_Funds_vs_Mutual_Funds_Which_Is_Better_for_Investment\"><\/span><b>Index Funds vs Mutual Funds: Which Is Better for Investment?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><b>Index vs mutual funds<\/b><span style=\"font-weight: 400;\">\u2013 how can you know which is better for your investment goals? It depends on the following factors:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Investment Goals: <\/b><span style=\"font-weight: 400;\">If you want steady and long-term growth with minimal involvement, index funds are a better choice. It provides broad, diversified exposure with predictable returns.\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">If you are looking for higher growth and willing to take on more risk, actively managed funds may suit you better.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Management Cost: <\/b><span style=\"font-weight: 400;\">Index funds generally have lower fees due to their passive management, which makes them more cost-effective. This is one of the most important points while discussing <\/span><b>index vs mutual funds<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Actively managed funds charge higher fees, which can reduce returns over time, but it is appealing if you are looking for higher returns on your investment.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Risk Tolerance: <\/b><span style=\"font-weight: 400;\">Index funds are ideal for low-risk investors as they offer diversification and lower volatility.\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Actively managed funds are more volatile and better if you are comfortable with risk and looking for higher returns.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Final_Thoughts\"><\/span><b>Final Thoughts<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Both i<\/span><b>ndex funds and mutual funds<\/b><span style=\"font-weight: 400;\"> are ideal investment options if you do not have enough time to research individual stocks. If you are a newbie investor, you can even start with \u20b9100 SIP.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As discussed above, you have to choose between <\/span><b>index vs mutual funds <\/b><span style=\"font-weight: 400;\">depending on your investment goals. To start your investment journey, it is always best to invest in a direct mutual fund, which generally has a lower expense ratio.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Open your lifetime free Demat account with Torus Digital and start your investment with a wide range of direct mutual funds!<\/span>[\/vc_column_text][\/vc_column_inner][\/vc_row_inner][vc_row_inner el_id=&#8221;share_rating&#8221;][vc_column_inner width=&#8221;1\/2&#8243;][vc_column_text css=&#8221;&#8221;]<\/p>\n<h6>Rate this article<\/h6>\n<!-- FeedbackWP Plugin --><div  class=\"rmp-widgets-container rmp-wp-plugin rmp-main-container js-rmp-widgets-container js-rmp-widgets-container--3728 \"  data-post-id=\"3728\">    <!-- Rating widget -->  <div class=\"rmp-rating-widget js-rmp-rating-widget\">            <div class=\"rmp-rating-widget__icons\">      <ul class=\"rmp-rating-widget__icons-list js-rmp-rating-icons-list\">                  <li class=\"rmp-rating-widget__icons-list__icon js-rmp-rating-item\" data-descriptive-rating=\"Terrible!\" data-value=\"1\">              <i class=\"js-rmp-rating-icon rmp-icon rmp-icon--ratings rmp-icon--star \"><\/i>          <\/li>                  <li class=\"rmp-rating-widget__icons-list__icon js-rmp-rating-item\" data-descriptive-rating=\"Bad!\" data-value=\"2\">              <i class=\"js-rmp-rating-icon rmp-icon rmp-icon--ratings rmp-icon--star \"><\/i>          <\/li>                  <li class=\"rmp-rating-widget__icons-list__icon js-rmp-rating-item\" data-descriptive-rating=\"Okay!\" data-value=\"3\">              <i class=\"js-rmp-rating-icon rmp-icon rmp-icon--ratings rmp-icon--star \"><\/i>          <\/li>                  <li class=\"rmp-rating-widget__icons-list__icon js-rmp-rating-item\" data-descriptive-rating=\"Good!\" data-value=\"4\">              <i class=\"js-rmp-rating-icon rmp-icon rmp-icon--ratings rmp-icon--star \"><\/i>          <\/li>                  <li class=\"rmp-rating-widget__icons-list__icon js-rmp-rating-item\" data-descriptive-rating=\"Great!\" data-value=\"5\">              <i class=\"js-rmp-rating-icon rmp-icon rmp-icon--ratings rmp-icon--star \"><\/i>          <\/li>              <\/ul>    <\/div>    <p class=\"rmp-rating-widget__hover-text js-rmp-hover-text\"><\/p>    <button class=\"rmp-rating-widget__submit-btn rmp-btn js-submit-rating-btn\">      Submit Rating    <\/button>    <p class=\"rmp-rating-widget__results js-rmp-results rmp-rating-widget__results--hidden\">       <span class=\"rmp-rating-widget__results__rating js-rmp-avg-rating\">0<\/span> \/ 5.  <span class=\"rmp-rating-widget__results__votes js-rmp-vote-count\">0<\/span>    <\/p>    <p class=\"rmp-rating-widget__not-rated js-rmp-not-rated \">          <\/p>    <p class=\"rmp-rating-widget__msg js-rmp-msg\"><\/p>  <\/div>  <!--Structured data -->        <\/div>\n<div id=\"emoji-overlay\" style=\"display: none;\">\n<div id=\"overlay-emoji\"><\/div>\n<div id=\"overlay-description\" class=\"emoji-text\"><\/div>\n<\/div>\n<div id=\"rating-popup\">\n<p><span id=\"popup-close\">\u00d7<\/span><\/p>\n<div class=\"popup_message\">\n<div id=\"popup-emoji\"><\/div>\n<div class=\"popup_innermsg\">\n<h5>Thank You for Rating Our Article!<\/h5>\n<p>Your feedback is incredibly valuable to us, and we&#8217;re thrilled to hear your thoughts.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<p>[\/vc_column_text][\/vc_column_inner][vc_column_inner width=&#8221;1\/2&#8243;][vc_column_text css=&#8221;&#8221;]<\/p>\n<h6>Share this article<\/h6>\n<div class=\"cscra-social square cscra-socials-679c8a1122c00\">\n        <a href=\"\/\/www.facebook.com\/sharer\/sharer.php?u=https%3A%2F%2Fwww.torusdigital.com%2Ftoruscope%2Fmutual-funds%2Fmutual-vs-index-funds%2F&t=Mutual+vs+Index+Funds%3A+What+Is+the+Difference%3F\" class=\"facebook\" data-toggle=\"tooltip\" data-placement=\"top\" title=\"Share On Facebook\" target=\"_blank\"><i class=\"fa fa-facebook\"><\/i><\/a>\n        <a href=\"\/\/twitter.com\/intent\/tweet?text=Mutual+vs+Index+Funds%3A+What+Is+the+Difference%3F&url=https%3A%2F%2Fwww.torusdigital.com%2Ftoruscope%2Fmutual-funds%2Fmutual-vs-index-funds%2F\" class=\"twitter\" data-toggle=\"tooltip\" data-placement=\"top\" title=\"Share On Twitter\" target=\"_blank\"><i class=\"fa-brands fa-x-twitter\"><\/i><\/a>\n        <a href=\"https:\/\/api.whatsapp.com\/send?text=Mutual+vs+Index+Funds%3A+What+Is+the+Difference%3F - https%3A%2F%2Fwww.torusdigital.com%2Ftoruscope%2Fmutual-funds%2Fmutual-vs-index-funds%2F\" class=\"whatsapp\" data-toggle=\"tooltip\" data-placement=\"top\" title=\"Share On WhatsApp\" target=\"_blank\"><i class=\"fa fa-whatsapp\"><\/i><\/a>\n        <a href=\"\/\/www.linkedin.com\/shareArticle?mini=true&url=https%3A%2F%2Fwww.torusdigital.com%2Ftoruscope%2Fmutual-funds%2Fmutual-vs-index-funds%2F&title=Mutual+vs+Index+Funds%3A+What+Is+the+Difference%3F\" class=\"linkedin\" data-toggle=\"tooltip\" data-placement=\"top\" title=\"Share On Linkedin\" target=\"_blank\"><i class=\"fa fa-linkedin\"><\/i><\/a>\n    <\/div>[\/vc_column_text][\/vc_column_inner][\/vc_row_inner][vc_row_inner el_id=&#8221;faq_blog&#8221;][vc_column_inner][vc_custom_heading text=&#8221;Frequently Asked Questions&#8221; font_container=&#8221;tag:h2|text_align:left|color:%23001316&#8243; use_theme_fonts=&#8221;yes&#8221; css=&#8221;&#8221;][\/vc_column_inner][\/vc_row_inner][vc_tta_accordion active_section=&#8221;1&#8243; el_id=&#8221;faq&#8221;][vc_tta_section title=&#8221;Are index funds safer than mutual funds?&#8221; tab_id=&#8221;1741084133227-8bcfa4c5-0fa3&#8243;][vc_column_text css=&#8221;&#8221;]<span style=\"font-weight: 400;\">You can consider index funds over actively managed mutual funds due to their diversified nature and passive management. However, all investments carry risk, and index funds are also subject to market fluctuations. <\/span>[\/vc_column_text][\/vc_tta_section][vc_tta_section title=&#8221;Which has better returns, index vs mutual funds?&#8221; tab_id=&#8221;1741084133247-2a4cfc81-fdd1&#8243;][vc_column_text css=&#8221;&#8221;]<span style=\"font-weight: 400;\">Index funds suit long-term investors who seek steady growth according to the market&#8217;s overall performance. Whereas actively managed mutual funds can serve both short- and long-term goals. However, it depends on the fund manager&#8217;s approach and your risk tolerance.<\/span>[\/vc_column_text][\/vc_tta_section][vc_tta_section title=&#8221;Can I invest in both index funds and mutual funds?&#8221; tab_id=&#8221;1741084264816-a99716aa-062d&#8221;][vc_column_text css=&#8221;&#8221;]<span style=\"font-weight: 400;\">Yes! You can invest in both mutual funds and index funds in your portfolio. If you want to invest in multiple funds, use a trusted platform such as Torus Digital.<\/span>[\/vc_column_text][\/vc_tta_section][vc_tta_section title=&#8221;How do I choose between an index fund and a mutual fund?&#8221; tab_id=&#8221;1741084286999-7d3f4375-0a0b&#8221;][vc_column_text css=&#8221;&#8221;]<span style=\"font-weight: 400;\">If you want predictable returns at a lower expense ratio, you can prioritise and index funds. Whereas, if you want to outperform the benchmark indices, you may consider active mutual funds. However, it has a higher risk and expense ratio.<\/span>[\/vc_column_text][\/vc_tta_section][vc_tta_section title=&#8221;Can I exit from an Index Fund anytime?&#8221; tab_id=&#8221;1741693782671-85430f4a-e25b&#8221;][vc_column_text css=&#8221;&#8221;]<span style=\"font-weight: 400;\">Yes, you can exit from an index fund at any time. You can redeem your units whenever you need, as there is no lock-in period for index funds. <\/span>[\/vc_column_text][\/vc_tta_section][\/vc_tta_accordion][\/vc_column][\/vc_row][\/vc_section]<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"[vc_section el_id=&#8221;blog-inner-layout&#8221;][vc_row overlay_dotted=&#8221;&#8221;][vc_column el_class=&#8221;blog_primary&#8221;][vc_row_inner][vc_column_inner][vc_column_text css=&#8221;&#8221;]When you are looking for different investment options in the stock market, you may have heard the terms \u201cmutual fund\u201d and \u201cindex fund\u201d. While some people use them interchangeably, they are not the same. There are two types of mutual funds: actively managed mutual funds and passively managed funds.\u00a0 In actively","protected":false},"author":1,"featured_media":4621,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_sitemap_exclude":false,"_sitemap_priority":"","_sitemap_frequency":"","footnotes":""},"categories":[4],"tags":[],"class_list":["post-3728","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mutual-funds"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Mutual Funds vs Index Funds - Key Differences Explained | Torus Digital<\/title>\n<meta name=\"description\" content=\"Explore the key difference between mutual funds and index funds. 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