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Mutual funds are financial instruments that allow investors to invest in equity or debt markets without prior knowledge or experience. These funds invest from many investors in equity or debt markets based on pool capital and then focus sector.
Mutual funds.
Despite market volatility and improvement in the last few months, greed for SIPs has not occurred among investors. It is still strong, as seen in SIP inflow data for January 2025.
According to AMFI, SIP’s arrival in mutual funds continued to grow at a good speed in January 2025, as FY2023-24 reflects a jump of 40 percent year as compared to Rs 18,388 crore in the same month.
Mutual funds are financial instruments that allow investors to invest in equity or debt markets without prior knowledge or experience. These funds invest from many investors in equity or debt markets based on pool capital and then focus sector. They then return the benefits to their investors after cutting themselves. Investors may face negative returns on their investment due to instability in markets.
There are two types of mutual funds – active and passive.
Let’s know the difference between active mutual funds and passive mutual funds:
Mutual funds are classified into active and passive funds based on their management style.
| Speciality | Active mutual fund | Passive mutual funds |
| Managing | Investment decision -making funds actively managed by managers. | A specific index without active management follows the Nifty 50, S&P500). |
| Objective | Perform better than the market (benchmark index). | Repeat the market performance. |
| Cost (expenditure ratio) | High (1-2%) due to research and active trade. | There is a minimum management since low (0.1–0.5%). |
| Return | If the fund manager chooses the right stock then it can be more. | Usually mirrors the market performance. |
| risk | More due to stock selection and market ups and downs. | At least it tracks the market with diversification. |
| Decide | The fund depends on the expertise and strategy of the manager. | Any active decisions simply follow the index. |
Passive has a low expenditure ratio that helps save cost over time. It is well diverse and has no dependence on fund manager skills.
Disclaimer: In this news18.com report, the ideas and investment tips of experts are their own and not the website or its management. Users are advised to investigate with certified experts before making any investment decisions.
