A simple average annual return calculation says that the index return is around 16%. For example, the consumer price index will comprise of prices that are relevant to a consumer—food, fuel, clothing and housing. Similar in a stock market index, the most representative companies that are listed on a stock exchange get included in a broad market index like the Sensex. When you hold an index fund, you don’t need to sell or buy stocks, as the index changes its composition, the index fund managers sell and buy the same stocks in the same proportion as the index. No, the Sensex may be 40 years old but is far from being in a middle-age slump.

Source: Mint April 02, 2019 10:45 UTC