Compared to actively managed funds, index funds has lower expense ratio.. ‘HDFC Index Fund – Sensex’ is one of the better index funds. It has an expense ratio of 0.3% (Regular Plan), and 0.1% (Direct Plan). Stock Market Basics for Beginners: A stock index or stock market index is a measurement of the value of a section of the stock market. It is computed from the prices of selected stocks (typically While i agree totally with the first reason, you seem to have ignored the fact that there are multiple index that exist around small caps, mid caps, sectoral, etc… A index fund is not just about the Sensex or Nifty. Secondly, on buying the index funds, a systematic investment would always take care of the volatility bit.