New Delhi, Feb. 12 -- The popularity of passive investing among investors who seek low-cost automation solutions has surged through the use of index funds together with Exchange-Traded Funds (ETFs).

Most investors choose passive funds since they provide broad market coverage at lower operating expense levels. Some investors miss crucial threats that exist in their investments.

This article investigates passive investing hazards which investors should understand when investing in index funds.

Market capitalisation represents the main characteristic which drives the majority of index fund operations. The index contains a larger portion of stocks that represent its biggest market values. The method works reliably in stable markets but exp...