InvestorQ : Why there is a restriction on investing in Vanguard index fund available in India?
sanjana Tulsiani made post

Why there is a restriction on investing in Vanguard index fund available in India?

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Nikita Damle answered.
4 weeks ago
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Index funds are a fairly recent phenomenon in India. Vanguard is the biggest index fund company in the world. There may be certain conditions and requirements that need to be met before it can be launched in India. Moreover, there may be some regulatory impediments that may be prohibiting it from giving Indian investors access to Vanguard index funds.

Typically, Vanguard index funds track indices such as S&P 500 and Wilshire 5000 (Total stock market index) which help investors benefit from exposure to even very small companies that have good potential to grow. The most popular indices in India are Sensex and Nifty 50 that have only 30 and 50 companies respectively, resulting in investors missing out on the growth of smaller companies.

Secondly, volumes of shares traded outside the top 100 or 200 companies are not much, inhibiting the creation of broad indices and index funds based on them. Indian markets are at a very nascent stage when compared to the US markets. This could be the reason why a company like Vanguard is hesitant to set up shop in the country.

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