What Are Passive Funds?
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Passive Funds
Passive funds invest on the basis of a specified index, whose performance it seeks to track. Thus, a passive fund tracking the S&P BSE Sensex would buy only the shares that are of the composition of the S&P BSE Sensex. The proportion of each share in the scheme’s portfolio would also be the same as the weightage 
assigned to the share in the computation of the S&P BSE Sensex.
Thus, the performance of these funds tends to mirror the concerned index. Passive Funds are not designed to perform better than the market or index. Such schemes are also called index schemes.
Since the portfolio is determined by the index itself, the fund manager has no role in deciding on investments. therefore, these schemes have low expenses.
Fund Managers of Passive Funds need to be very careful in tracking errors compared to its index. They don’t have to create alpha their only responsibility is to try to mirror index performance with least errors.
Passive Investing is very much popular in the western markets and is also gaining its market share among the Indian Investors too.
Also, Read about Active Funds
Hi, I’m Managing Director at Gurpreet Saluja Financial Services where I help my investors to invest in mutual funds and achieve their financial goals. I’m also a Value Investor and here I write about Personal Finance & Investing.