New Delhi, Sept. 15 -- Index funds are designed to be simple. They track a market index such as the Nifty 50, allowing investors to participate in the benchmark without trying to pick winning stocks. But simplicity does not mean every index fund tracking the same benchmark will deliver identical returns.

Small differences in costs, execution and portfolio management can cause one fund to consistently lag its benchmark more than another. This raises an important question for investors. When does the difference become large enough to justify switching from one index fund to another?

According to Anshi Shrivastava, Head - Personal Finance Training at 1 Finance, the primary reason to switch should be a fund's ability to track its benchmark,...