Index Funds & ETF if they are tracking the same Index, will be same in Idea world. The difference would be because of the following factors;

1. Expense ratio: IE the expense the funds would charge. This varis and hence it would lead to difference in performance.

2. Tracking error, this means that there is a small percentage of error between the actual index composition and the Fund composition. This is due to various reasons, effectively this would result in the difference between values.

3. Demand / Supply: In ETF, the fund is traded on stock exchange like a stock. If the general feeling is that Index is rising, it would lead to increase in the price of ETF. Index Funds on the other hand would remain same for the day, and are less liquid. This results in price increase / decrease depending on the market.

The above explains the reason for difference. Regarding which one to buy, one would need to consider other factors like;

a) How easy is it to buy ETF, do you already hold Demat A/C & access to brokers to help you condut the transaction, or you need to open additional account at some fees.

b) Normally funds do not need any account, but are you OK with less liquidity as it would take more time to redeem funds.

Index Funds & ETFs, if they are tracking the same index, will be the same in an ideal world. The difference would be because of the following factors:

1. Expense ratio: i.e. the expense the funds charge. This varies and hence it would lead to a difference in performance.

2. Tracking error: this means that there is a small percentage of error between the actual index composition and the fund composition. This is due to various reasons. Effectively this would result in the difference between values.

3. Demand / Supply: with ETFs, the fund is traded on stock exchanges like a stock. If the general feeling is that the index is rising, it could lead to an increase in the price of the ETF. Index funds on the other hand would remain the same for the day and are less liquid. This results in a price increase / decrease depending on the market.

The above explains the reason for the difference.

Regarding which one to buy, one would need to consider other factors like:

a) How easy is it to buy ETFs? Do you already hold Demat A/C & access to brokers to help you conduct the transaction or do you need to open an additional account at some cost.

b) Normally funds do not need any account, but are you OK with less liquidity as it would take more time to redeem funds.