Investing in stocks through the mutual fund route is both convenient and effective. However, as the number of mutual funds increases, it becomes difficult to choose the right one. And, keeping in mind the fact that studies have shown that it is difficult to outperform the market, one feels compelled to rethink the whole exercise of choosing the right fund. Indeed, it would be much easier and more lucrative to simply invest directly in an index.

Mutual funds that enables an investor to invest in the index are called index funds.Such funds invest their portfolios only in stocks that comprise a particular index, in the same proportion in which they are represented in the index. As a result, the performance of such funds mirrors the performance of the index. The mutual fund sector in India has a variety of such funds, so investing in an index is truly within your reach.

In fact, the mutual fund sector goes a step further to offer you funds that not only mirror an index but whose units can be traded on the stock exchange in much the same way as a common stock. These funds are called Exchange Traded Funds or ETFs.

For more information, visit www.benchmarkfunds.com