n NISM Certifications
X NISM Series X
Medium

What is a key advantage of Index Funds over actively managed funds?

Practice question from NISM Series XB- Investment Adviser (Level 2) Mock Test 1 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. Lower costs

    Correct answer

  2. B

    More tax savings

  3. C

    Better returns due to alpha

  4. D

    All of the above

Why this is the answer

Index funds passively track a market index, resulting in lower management fees compared to actively managed funds, which involve higher costs.

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