Nifty Index Funds
Nifty Index Funds track India's Nifty 50, offering a cost-effective way to invest in a diversified portfolio of top-performing stocks on the National Stock Exchange. It's a straightforward method to build an equity portfolio that's good for long-term growth without worrying about individual stock picks.
Gives Annual Returns of approx. 21-26%
Outperforms Fixed Deposits over the long term
Low-cost Investment Option
Automatically follows the Market's Top Companies
What are Nifty Index Funds?
Nifty Index Funds are mutual funds that invest in the same companies as the Nifty 50 index. This index includes 50 of the largest companies in India. These funds follow a passive investment strategy, which means they automatically track the performance of the Nifty 50 without the need for picking individual stocks.
This approach offers a low-cost, efficient way to invest in the stock market, spreading risk across various top-performing companies - a hassle-free option for investors that requires minimal monitoring.
List of Nifty Index Funds Based on Last 3-Year Returns
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Motilal Oswal Nifty Smallcap 250 Index Fund Direct Growth▲ 20.68%AUM ₹820 Cr •
Expense 0.36%
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ICICI Prudential Nifty Smallcap 250 Index Fund Direct Growth▲ 20.62%AUM ₹424 Cr •
Expense 0.33%
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Aditya Birla Sun Life Nifty Midcap 150 Index Fund Direct Growth▲ 20.57%AUM ₹285 Cr •
Expense 0.44%
- Motilal Oswal Nifty Midcap 150 Index Fund Direct Growth▲ 20.54%
AUM ₹1894 Cr •
Expense 0.3%
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Nippon India Nifty Smallcap 250 Index Fund Dir Gr▲ 20.51%AUM ₹1883 Cr •
Expense 0.35%
- Nippon India Nifty Midcap 150 Index Fund Direct Growth▲ 20.27%
AUM ₹1590 Cr •
Expense 0.3%
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UTI Nifty200 Momentum 30 Index Fund Direct Growth▲ 17.3%AUM ₹8121 Cr •
Expense 0.39%
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Kotak Nifty Next 50 Index Fund Direct Growth▲ 16.54%AUM ₹346 Cr •
Expense 0.11%
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DSP Nifty Next 50 Index Fund Direct Growth▲ 16.45%AUM ₹838 Cr •
Expense 0.28%
- Motilal Oswal Nifty Next 50 Index Fund Direct Growth▲ 16.35%
AUM ₹297 Cr •
Expense 0.35%
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LIC MF Nifty Next 50 Index Fund Direct Growth▲ 16.33%AUM ₹94 Cr •
Expense 0.32%
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SBI Nifty Next 50 Index Fund Direct Growth▲ 16.33%AUM ₹1395 Cr •
Expense 0.33%
- UTI Nifty Next 50 Index Fund Direct Growth▲ 16.32%
AUM ₹4692 Cr •
Expense 0.36%
- ICICI Prudential Nifty Next 50 Index Fund Direct Plan Growth▲ 16.31%
AUM ₹6759 Cr •
Expense 0.31%
- Nippon India Nifty 50 Value 20 Index Fund Direct Growth▲ 16.14%
AUM ₹865 Cr •
Expense 0.25%
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HDFC NIFTY Next 50 Index Fund Direct Growth▲ 16.08%AUM ₹1713 Cr •
Expense 0.3%
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HSBC Nifty Next 50 Index Fund Direct Growth▲ 16.07%AUM ₹130 Cr •
Expense 0.35%
- Motilal Oswal Nifty 500 Fund Direct Growth▲ 13.55%
AUM ₹2022 Cr •
Expense 0.2%
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Axis Nifty 100 Index Fund Direct Growth▲ 11.5%AUM ₹1662 Cr •
Expense 0.21%
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Bandhan Nifty 50 Index Fund Direct Plan Growth▲ 10.96%AUM ₹1565 Cr •
Expense 0.1%
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Benefits of Investing in Nifty Index Funds
Adding Nifty Index Funds to your investment mix can offer numerous benefits. Let's see how!
Low Cost
These funds have lower fees because they're passively managed. Without the need for active stock picking, the savings on management costs are passed on to you, the investor.
Diversification
By investing in a Nifty Index Fund, you spread your money across 50 major companies. This mix helps reduce the risk of losing money if a single company or sector underperforms.
Ease of Investment
There's no need to constantly monitor or choose individual stocks. Once you invest, the fund follows the Nifty 50 index, simplifying your investment process.
Transparency
You always know which companies you're invested in because the fund mirrors the Nifty 50 index. This transparency helps you understand your investment and its performance.
Market Representation
The Nifty 50 is a broad indicator of the Indian stock market's performance. By investing in a Nifty Index Fund, you're closely aligned with the economic trends and growth of India's largest publicly traded companies.
Accessibility
These funds are accessible to everyone, regardless of investing experience or capital. They provide an opportunity to invest in top companies without needing a large amount of money to start.
Who should invest in Nifty Index Funds?
Nifty Index Funds are suitable for a variety of investors. Let's see who might benefit the most
For Beginners/Novice Investors
Nifty Index Funds are ideal for beginners seeking a simple, low-risk entry into the stock market without the hassle of selecting individual stocks.
For Long-Term Investors
Those with a long investment horizon can benefit from the passive strategy of Nifty Index Funds, aligning with market trends for sustained growth over time.
For Cost-Conscious Investors
Investors looking for a cost-effective way to access the Indian stock market can choose Nifty Index Funds, as they typically have lower expense ratios compared to actively managed funds.
Points to consider before investing in Nifty Index Funds
There are a few things that you must consider before you put your money in Nifty Index Funds. Below are the points mentioned in detail
Expense Ratios
Compare the expense ratios of different Nifty Index Funds. Even though they are low-cost, fees can vary between funds. Check the expense ratios to ensure you're choosing a cost-effective option.
Tracking Error
Evaluate how closely the fund mirrors the Nifty 50 to assess its tracking accuracy and performance consistency. Know that if the index falls, your investment value will likely decrease as well.
Fund Manager Reputation
Research the track record of the fund manager track record and reputation for effective management and decision-making.
Liquidity
These funds are generally liquid. But it's important to consider your own cash flow needs - whether you might need your invested funds quickly.
Historical Performance
Examine the fund's past performance to evaluate if it will be able to deliver returns during various market conditions.
Investment Time Frame
Make sure your investment time matches the fund's approach, since Nifty Index Funds are typically best for people looking to invest for the long run.
Limitations of Investing in Nifty Index Funds
Even with their advantages, Nifty Index Funds come with certain limitations to consider
Limited Stock Selection
Nifty Index Funds are restricted to the stocks in the Nifty 50, potentially missing out on opportunities outside this index.
Market Volatility Impact
As passive investments, these funds are influenced by market fluctuations, which might impact returns during highly volatile periods.
Underperformance in Bull Markets
In bull markets, actively managed funds may outperform Nifty Index Funds, as the latter simply mirrors the Nifty 50 without capitalising on individual stock opportunities.
How to start investing in Nifty Index Funds with INDmoney?
INDmoney is here to make your investment journey smooth and simple. Let us see how you can invest in Nifty Index Funds with INDmoney.
Step 1
Download the INDmoney app and create your free investment account by completing your (KYC) (Know Your Customer).
Step 2
Once your Free investment account is ready, you can either search for Nifty Index Mutual Funds or go to the mutual fund section and tap on Index Funds from the collection section.
Step 3
Choose a Nifty Index Fund after observing past returns, volatility, AUM, expense ratios, and underlying stocks and sectors.
Step 4
You can choose to set up SIP in Nifty Index Funds or invest in lump sum.
Step 5
Specify the amount you wish to invest, whether as an instalment or a lump sum amount.
Step 6
Arrange your payment method. For SIPs, set up an auto-debit with your bank or UPI. For a lump sum, you can use UPI, net banking, or other bank transfer methods like NEFT or RTGS.
Should you invest in Nifty Index Funds?
Investing in Nifty Index Funds can be beneficial for those seeking a hassle-free, diversified exposure to the Indian stock market. Suited for novice and long-term investors, these funds offer cost-effectiveness and align with market trends. However, consider limitations like restricted stock choices and vulnerability to market fluctuations. Assess your investment goals, risk tolerance, and preferences to determine if Nifty Index Funds align with your financial strategy.
Frequently Asked Questions
A Nifty Index Fund is a type of mutual fund that aims to replicate the performance of the Nifty 50, India's benchmark stock market index.
These funds passively track the Nifty 50 composition, investing in the same stocks to mirror the index's performance, offering investors exposure to the broader market.
Nifty Index Funds provide diversification, cost-efficiency, and align with the overall market trends, making them suitable for various investors.
Consider factors such as expense ratios, tracking error, historical performance, liquidity, and the reputation of the fund manager before making a selection.
Limitations include restricted stock choices, vulnerability to market volatility, and potential underperformance in bullish markets.
These funds are suitable for novice investors, long-term investors, and those seeking a cost-effective way to access the Indian stock market.
Consider factors such as expense ratios, tracking accuracy, fund manager reputation, liquidity, historical performance, and your investment horizon.
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