Otherwise whats the option?
If we invest in actual indices , Nifty 50, Nifty next 50 , Midcap 150, Smallcap 250…Out of these 500 stocks, roughly 90% stocks are not worth investing, either they are loss making, or cyclical businesses, degrowing businesses, High Leverage , debt ridden businesses, Govt owned and PSU businesses, some newly listed , useless crap businesses…And such businesses are around 450 out of 500. Why one should invest their hard earned money into such crappy businesses, just because , index provides them.comfort of not selecting their stocks, and no mental pain of watching their stocks going down daily.
As far as , 40-50 numbers are concerened , once some.basic parameters are in place, you may not have to monitor minutely. Just a cursory glance will be fine.
I have seen portfolio of many active funds and PMS, flexicap, multicap and they have another kind of compulsion, lots of money is entering in market and fund managers are running short of ideas…they have to deploy money in these 450 companies too, knowing fully well that they are entering into shitty companies, but its not their money, they are just thinking of their fees and very short term view.
As for weightages, maybbe those stocks from Nifty 50 and nifty next 50, which qualifies above criteria , can be upto 60% while remaining can be upto 40%.
Only issue is , you need to keep watch, over time many companies from these 40 will slide into 450 and vice versa.
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