Are Index Funds the Key to Effective Diversification in 2023?

Diversification is an essential element in crafting a balanced investment portfolio. Investors commonly distribute their funds across various asset classes, such as equities, debt instruments, real estate, and precious metals like gold. Further diversification within each class can effectively minimize risks. For instance, in equity investments, a tried-and-tested method for risk reduction is to diversify an equity portfolio by investing in shares of companies from different sectors with varied market capitalizations. Here, Index Funds become particularly significant. This analysis will comprehensively examine Index Funds, explore their types available in India, outline their benefits, and more.