Finshots Daily Should you just 'index and chill'?
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Oct 18, 2025 Explore the battle between active and passive investing. Discover why a dart-throwing analogy supports passive approaches, and how consistent winners challenge luck in stock picking. Learn about the rise of passive funds in India and their role in minimizing behavioral mistakes. Delve into the risks of index concentration and when active management can shine. Uncover the balance between core passive investments and active strategies, with insights on wealth compounding and the importance of allocation for success.
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Why Passive Works By Doing Less
- Passive funds mirror the market and remove costly human tinkering from returns.
- Indexes auto-upgrade by owning more of what works and less of what fails.
Index Concentration Can Inflate Risk
- Large inflows can concentrate index funds into a few big winners, inflating prices.
- That concentration can magnify losses when those dominant names stumble.
Market Inefficiencies Create Active Opportunities
- India’s markets still contain inefficiencies where skill can generate alpha.
- Active managers aim to exploit under-researched pockets like small and mid caps.
