Index funds are not less risky, according to Edelweiss Chief Executive Officer Radhika Gupta. Her comments come as several investors have been concerned about SIPs because of negative returns, as markets see correction.
In a post on X, Gupta said she has been receiving a lot of investor queries, with many saying they were worried about markets, and have stopped mutual fund SIPs and switched to index funds.
With the markets correcting over 11%, many investors have pivoted from their objective of making gains to protection of principal.
However, even as index funds are often perceived less risky, Gupta has labeled this thought a myth.
“Sorry to break the myth that some strange articles have spread: index funds are not less risky. Buying an active small cap or small cap index fund is the SAME risk — that of small caps. The only additional risk in the active fund is manager performance (could also be outperformance),” she posted.
Equating the risk of index funds with that of actively managed small caps, the CEO batted for different options.
