The very few investments I have in equities is (all) in - diversified equity mutual funds.
Diversified equity funds invest fully in equities, except for the cash reserves Fund managers keep. By investing in all sectors, and various companies in sectors they average out the risks. Also their investment philosophy allows the manager to find out the most under-valued stocks.
Recently only i enquired about Index funds. Index funds are passive funds which follows the market. Index funds invest in the companies that feature in the benchmark index and in the same proportion. So as indexes rise, the fund value will automatically rise.
It is said that in matured markets like US index funds are more popular, as it is difficult to beat the market ( why ? - things are stablized there ?)
Here the index in 1993 and 2003 was around 4000. so after investment of 10 years, it would have been a no-rise in the value... But now in these 4 years sensex has reached 14500 points..
Any guess on the value in 2050 ?
Index funds will be attractive because of
- low risk ( but in a emerging market like india , it means low returns, but nearly equal to benchmark indexes)
- low cost ( no active fund management needed )
So should take an eye on Index funds also..!
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