More households have women at the center of financial planning, and the data supports this transition, which has been evident over the past five years. One of the top mutual fund investors in the country is a woman investor.
The story is not just about increasing women’s participation in investing, but about how women approach investing across asset classes and categories of schemes.
If you’re a woman who makes your own investment decisions, you’re more likely to be thorough and smart about the framework you use to invest. You’ll want to determine your investment goals, understand the market to map out the investment options available to meet your goals and your risk appetite, and, if necessary, connect with a trusted advisor to guide you on your investment journey.
While it may seem complicated and time-consuming, you also want to participate in the markets even as you refine your investment choices.
This is where passive investing, that is, investing in index funds and ETFs, is a practical starting point.
Low-cost, rules-based, passive investing makes it an ideal vehicle, not only to form the core of one’s investment portfolio, but also to participate in narrower themes such as sector or theme-based investing. According to AMFI’s latest data, passive funds now manage nearly ₹15 trillion in assets, with investor interest in such low-cost, rules-based passive investments growing only month after month.
This growth is not limited to any one category, such as the Nifty 100 index. Investors specialize in sector-specific indices, commodity indices such as gold and silver, and thematic return drivers such as value or quality.
From investing to financial planning – how the definition of empowerment has changed
India’s digital public infrastructure, a unique digital identity to a unified payments interface, coupled with the emergence of various fintech platforms, has empowered women to make investment decisions.
But access alone is not a sign of a strong female investor in India today. Empowerment is reflected in her ability to allocate money in a way that best meets her financial goals. These goals can include spending money to finance your many dreams of vacations, buying a new EV, a graduate course, children’s education, or health and retirement security. The goal is to live her dreams and provide cash flow to fund her life stages.
In passive funds, various index funds and ETFs, a woman will find this approach attractive because it is rule-based in portfolio construction and low cost in portfolio access.
Passive Strategies for Female Investors
A broad-based equity index fund or ETF, tracking the Nifty 100 index or the Nifty 50 index (investing in blue-chip, large-cap stocks), can serve as a fundamental layer to participate in India’s economic growth story. This can create a stable home with long-term financial goals.
Factor-based passive strategies, that is, investing in indices or benchmarks that focus on specific drivers of stock returns, may be desirable for pursuing better investment styles. These indices are built around characteristics such as value, quality, low volatility or momentum. For example, if you think Indian markets are overvalued, you can set your preference for value by investing in a scheme tracking the Nifty 500 Value 50 Index. If you want to participate in popular trends that are going on, you can choose Nifty 500 Momentum 50 index. Factor-based strategies help you add your own style preferences as you build your investment portfolio.
Gold and silver hold the same place in our hearts as they did for generations of women before us. In your investment portfolio, you can find space through gold or silver ETFs or mutual funds. Invested in the right proportions, they act as an effective hedge against the volatility that equities as an asset class can bring to your portfolio in uncertain times.
There are index funds with only fixed income instruments such as bonds as assets. Some of these indices have a fixed maturity date, similar to the maturity date of the bank fixed deposit you are familiar with. These funds help us meet our near-term financial goals, where one can choose funds that match our investment horizon to meet our near-term goals.
Finally, systematic allocation in passive funds, through the SIP route, drives home discipline, rupee cost averaging and continuity in the investment journey are benefits for every investor. Regular investing in index funds or ETFs through SIPs allows investors to build exposure gradually, reducing noise around time and cashing out investments in response to daily news flows.
Conclusion
Women in India already control more assets, invest in more equities, and hold a larger share in each mutual fund investment portfolio than in the past. The change is seen not only in published data but also in faster allocation choices, greater awareness of costs and a clear focus on long-term flexibility. Investing by women is more deliberate and structured.
Index funds offer women investors a simple way to translate this unique power into smart investment choices. They provide a foundation that can adjust to evolving goals and evolving responsibilities. As more women shape their financial futures with clarity and discipline, the investment choices women make become a reflection of their independence.
(Author Vandana Trivedi, Head – Institutional Sales & Passive Axis AMC)
(Disclaimer: Suggestions, recommendations, opinions, and opinions given by experts are their own. They do not represent the views of The Economic Times.)
