Why is inflows in index funds growing?

Inflow in index funs increase in last couple of year, there are several factors because of which the inflow increase. The major reason is institutional investments like EPFO. The awareness around the index fund increase in the last couple of years and because of those lots of NFOs come out and increases the inflow. Due to the growth story lots of new investors want to participate in equity market and the comparatively safer way is index funds with limited knowledge. Fall of debt /FD return also motivate the investor to look into market and index fund. Moreover index funds are also favorite for financial advisor for long term investors because of low cost and helping in creating core portfolio.

Should investor bet on index funds and what are the advantages and disadvantages?

 we can say index funds are starting point for a new equity investor . Due to decreases in interest rate investor has to find other way of investment where they can get long term appreciation. As an advisor we recommend that one must consider index funds for their core portfolio as we know for long term investment we did not required actively manage fund. One should have fairly balanced between active funds and passive fund to get a stable return .

The main benefit for a individual of the index is it is diversified, simple and transparent. And for an advisor it is low cost investment, suitable for core portfolio and helpful in asset allocation.

On the other hand there is some limitation of index fund like it is will not outperform the market as it invent in market index only. It is not actively managed and limited exposure to the selected index only.