10 Best Index Funds in India
Investing doesn’t have to be complicated. Whether you’re a seasoned investor or a beginner, index funds have emerged as the perfect gateway to wealth creation in India. They are cost-effective, straightforward, and powerful tools for those who wish to mirror market performance without actively picking stocks.
If you’ve been keeping up with the buzz, you might have heard terms like “Nifty,” “Sensex,” and “expense ratio” floating around. But what do they really mean, and why should you care? In this comprehensive guide, we’ll uncover the 10 Best Index Funds in India, perfect for anyone aiming to achieve financial freedom.
Why Choose Index Funds?
Index funds are mutual funds designed to replicate the performance of a specific market index, such as the Nifty 50 or Sensex. With low expense ratios, they’re a dream for cost-conscious investors who want diversified exposure to the stock market.
Still skeptical? Consider this: according to a study by S&P Dow Jones Indices, 86% of actively managed equity funds failed to outperform their benchmark indices over a 10-year period. Index funds, on the other hand, deliver consistent and predictable returns, making them a winner in the long run.
What’s in This Guide?
- A quick comparison table of the top funds
- Detailed reviews of each fund
- Tips to select the right index fund for your needs
- Frequently asked questions to clear your doubts
Best Index Funds in India
| Index Fund | Category | AUM (₹ Crs) | Min. Investment (₹) | Returns (p.a) | Expense Ratio | Age |
|---|---|---|---|---|---|---|
| Motilal Oswal Nifty Midcap 150 | Mid Cap Index | ₹1,986 | ₹500 | 30.03% | 0.3% | 5+ yrs |
| Motilal Oswal Nasdaq 100 FOF | International Index | ₹5,469 | N.A. | 29.17% | 0.24% | 6+ yrs |
| Motilal Oswal Nifty Next 50 | Large Cap Index | ₹310 | ₹500 | 23.05% | 0.35% | 5+ yrs |
| Axis Nifty 100 Index Fund | Large Cap Index | ₹1,710 | ₹500 | 17.51% | 0.21% | 5+ yrs |
| Bandhan Nifty 50 Index Fund | Large Cap Index | ₹1,645 | ₹500 | 16.76% | 0.1% | 12+ yrs |
| Motilal Oswal Nifty 50 Index Fund | Large Cap Index | ₹586 | ₹500 | 16.74% | 0.15% | 5+ yrs |
| UTI Nifty 50 Index Fund | Large Cap Index | ₹20,083 | ₹500 | 16.72% | 0.18% | 12+ yrs |
| SBI Nifty Index Fund | Large Cap Index | ₹8,679 | ₹500 | 16.68% | 0.2% | 12+ yrs |
| Nippon India Index Nifty 50 | Large Cap Index | ₹5,012 | ₹500 | 16.65% | 0.22% | 10+ yrs |
10 Best Index Funds in India
1. Motilal Oswal Nifty Midcap 150 Index Fund: A Mid-Cap Marvel
What Makes It Stand Out?
If you’re looking for a fund that taps into the mid-cap space, this is your best bet. The Motilal Oswal Nifty Midcap 150 Index Fund mirrors the Nifty Midcap 150 index, giving investors exposure to 150 of India’s fastest-growing mid-cap companies.
Why Choose This Fund?
- High Growth Potential: Mid-cap companies often outperform large caps in bull markets.
- Low Expense Ratio: At just 0.3%, this fund ensures more of your returns stay in your pocket.
- AUM and Performance: With ₹1,986 crores under management, this fund has consistently delivered 30.03% annual returns over the past five years.
Who Should Invest?
This fund is ideal for moderately aggressive investors looking for high growth but are comfortable with a bit of volatility.
2. Motilal Oswal Nasdaq 100 FOF Scheme: Your Gateway to US Markets
Highlights
This fund replicates the Nasdaq 100, offering exposure to the top 100 non-financial companies listed on the Nasdaq exchange.
Unique Features
- Global Exposure: Invest in companies like Apple, Microsoft, and Tesla.
- Impressive Returns: Delivered 29.17% annualized returns.
- Diversification: Protects against domestic market downturns.
Why This Fund?
Global diversification is essential, and this fund offers it seamlessly. The low expense ratio of 0.24% is the cherry on top!
3. Motilal Oswal Nifty Next 50 Index Fund: The Large-Cap Challenger
What’s Special?
This fund tracks the Nifty Next 50 index, comprising the next 50 companies after the Nifty 50. Think of it as the stepping stone for tomorrow’s market leaders.
Key Details
- AUM: ₹310 crores.
- Returns: 23.05% annually.
- Expense Ratio: 0.35%.
4. Axis Nifty 100 Index Fund: A Large-Cap Favorite
Why It’s a Solid Choice?
The Axis Nifty 100 Index Fund offers exposure to India’s top 100 companies by market capitalization, combining stability and growth.
Key Features
- Diversified Portfolio: Tracks the Nifty 100 Index, encompassing large-cap leaders.
- Consistent Returns: 17.51% annualized returns over five years.
- Low Minimum Investment: Start with just ₹500.
- Expense Ratio: 0.21%, ensuring cost-efficient investing.
Who Should Invest?
This fund is ideal for conservative investors who prefer stability over volatility. Its large-cap exposure makes it a reliable option for long-term wealth creation.
5. Bandhan Nifty 50 Index Fund: The Stability Specialist
Overview
Tracking the Nifty 50 Index, this fund invests in the top 50 blue-chip companies in India, ensuring stability and steady growth.
Why It’s Popular?
- Low Expense Ratio: At 0.1%, it’s one of the most cost-effective funds.
- High AUM: ₹1,645 crores reflect investor trust.
- Long-Term Consistency: With 12+ years of history, it delivers stable returns of 16.76% annually.
Ideal For?
Investors looking for a long-term, low-risk, and steady growth option.
6. Motilal Oswal Nifty 50 Index Fund: A Trustworthy Performer
What Sets It Apart?
This fund also tracks the Nifty 50, offering exposure to 50 of India’s most prominent companies.
Key Metrics
- Expense Ratio: A competitive 0.15%.
- Returns: 16.74% per annum.
- AUM: ₹586 crores.
Who Should Consider This Fund?
Those seeking a balanced mix of growth and stability with minimal expense costs.
7. UTI Nifty 50 Index Fund: A Market Leader
Highlights
With a whopping ₹20,083 crores in AUM, this fund is a go-to option for Nifty 50 enthusiasts.
Why It’s Reliable?
- Proven Track Record: Over 12 years of consistent performance.
- Competitive Expense Ratio: 0.18%.
- Returns: Steady at 16.72% annually.
Who Should Choose This?
Long-term investors who want the assurance of a well-established fund.
8. SBI Nifty Index Fund: A Household Name
Key Points
- Category: Large-Cap Index.
- AUM: ₹8,679 crores.
- Returns: 16.68% annually.
- Expense Ratio: 0.2%.
Why It’s a Good Pick?
SBI is a trusted name, and this fund reflects that trust with steady performance over 12+ years.
Target Audience
Beginner and moderate investors who value stability.
9. Nippon India Index Nifty 50: A Rising Star
Details
This fund mirrors the Nifty 50 Index and has gained popularity for its robust performance and affordability.
Key Features
- Returns: 16.65% per annum.
- Expense Ratio: 0.22%.
- AUM: ₹5,012 crores.
Why Invest?
It’s a solid choice for investors seeking growth from India’s top-performing companies.
10. Kotak Nifty 50 Index Fund: The Underrated Performer
Overview
The Kotak Nifty 50 Index Fund combines cost efficiency with stable returns, making it a dependable option for passive investors.
Key Metrics
- AUM: ₹3,200 crores.
- Expense Ratio: 0.15%.
- Returns: 16.7% annually.
Perfect For
Investors looking for a less-talked-about yet highly effective fund.
11. HDFC Index Fund – Nifty 50 Plan: The Veteran
What Makes It Stand Out?
As one of India’s oldest index funds, it brings decades of trust and experience to the table.
Highlights
- AUM: ₹7,500 crores.
- Expense Ratio: 0.1%.
- Returns: 16.69% annually.
- Minimum Investment: ₹500.
Who Benefits Most?
Investors aiming for consistent performance backed by a trusted brand.
FAQs on Index Funds in India
- What are the advantages of investing in index funds?
Index funds are cost-effective, provide diversification, and deliver consistent long-term returns by mirroring market performance. - Are index funds suitable for beginners?
Absolutely! Their simplicity and low risk make them perfect for new investors. - How are index funds different from actively managed funds?
Index funds track a specific benchmark, while actively managed funds rely on fund managers to pick stocks, often leading to higher costs. - What is the expense ratio in an index fund?
It’s the annual fee charged by the fund, usually much lower than actively managed funds. - How to choose the best index fund in India?
Look at factors like the fund’s expense ratio, AUM, and historical returns to make an informed decision. - What’s the minimum investment required for index funds?
Most funds start with ₹500, making them accessible to all. - Do index funds guarantee returns?
No, but they provide predictable performance aligned with the index. - Can I lose money in index funds?
Yes, short-term market volatility can lead to losses, but the risk reduces over the long term. - Are index funds taxed in India?
Yes, they are subject to capital gains tax. Short-term gains are taxed at 15%, and long-term gains above ₹1 lakh are taxed at 10%. - Which is the best index fund for long-term investment?
Funds like UTI Nifty 50 Index Fund and Motilal Oswal Nasdaq 100 FOF Scheme are excellent for long-term goals.
Conclusion: Harness the Power of Index Funds
Index funds are the unsung heroes of wealth creation, providing a seamless way to invest in India’s booming economy. With their low costs, diversification, and predictable returns, they’re perfect for beginners and seasoned investors alike.
Ready to take the plunge? Choose from our list of the 10 Best Index Funds in India and start your journey toward financial freedom today. Don’t wait—the best time to invest is always now! 🚀