Best Index Funds in India: How to Choose the Best One?

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best index funds in India

Nowadays, many people in India are putting their money into mutual funds to grow their savings. Among these, index funds in India are one of the top choices because they are easy to understand, cost less, and perform well. 

This article focuses on the best index funds in India for 2023 and guides you on how to choose the top index funds in India. These have grown a lot and can give you steady money back.


What Are Index Funds?

Index funds in India, like those tracking the Nifty 50 index fund, aim to copy the performance of specific market indexes. They invest in the same stocks and in the same amounts as the index they follow. Because of this, they’re called “passively managed,” meaning there’s no need for fund managers to pick stocks actively. 

The main goal of these index funds is to match how the underlying index performs. For example, if the Nifty 50 goes up, the value of a Nifty 50 index fund will also go up. On the other hand, if the Nifty 50 index fund drops, its value will drop too. These funds give investors a broad view of the market or a specific sector, offering both variety and a good market snapshot.

However, index funds in India are cheap to own because they don’t need experts to manage them, and they are easy to understand. This means you could make more money easily. If you follow the Nifty 50 index fund, you won’t have to watch them all the time.


Key Takeaways

  • It is important to know your investment goals to pick the right index funds.
  • Index funds offer a cost-effective way to enter the stock market.
  • Index funds are suitable for both beginner and seasoned investors.

10 Best Index Funds in India

Since index funds are popular among people living in India, it is important to know the best index funds in India to help you make decisions before investing.

1. Nippon India Index Fund S&P BSE Sensex Plan Direct-Growth

best index funds in India

Fund Size (AUM): ₹477 Crs
Age: 10 Yrs+
Expense Ratio: 0.15%
Min. Investment: SIP ₹500
1-year Performance: 20.25%
3-year Performance: 21.58%
5-year Performance: 13.61%
10-year Performance: 13.6%

Overview:

The Nippon India Index Fund S&P BSE Sensex Plan Direct-Growth is the first top index fund India, and aims to copy how the S&P BSE Sensex performs. That’s a big deal in India because it’s the main way people measure the stock market. 

The fund invests in 30 big, well-known companies from different areas. It aims to grow your money over time and doesn’t cost much to own, making it a favorite for many investors.

Suitable For:

This is one of the best index funds in India, which is a good fit for people who plan to invest for a long time and are accepted with some risk. It gives you a chance to invest in top companies and can be a key part of a varied investment mix.

2. HDFC Index S&P BSE Sensex Direct Plan-Growth

best index funds in India

Fund Size (AUM): ₹5,071 Crs
Age: 10 Yrs+
Expense Ratio: 0.2%
Min. Investment: SIP ₹300
1-year Performance: 20.24%
3-year Performance: 20.59%
5-year Performance: 13.57%
10-year Performance: 13.95%

Overview:

The HDFC Index S&P BSE Sensex Direct Plan-Growth is another top pick for best index funds in India for 2023. This fund aims to match the S&P BSE Sensex index’s performance. Since It’s a direct plan, it’s cheaper than regular ones, which means you could make more money. 

The people running index funds work hard to make sure they follow the index closely. It’s gained a lot of customers because it’s easy to understand and has been good at making money consistently.

Suitable For:

If you want a simple way to invest in big Indian companies, think about the HDFC Index S&P BSE Sensex Direct Plan-Growth. It’s a good fit for both newcomers and people who’ve been investing for a while.

3. Bandhan Nifty 50 Index Fund Direct Plan-Growth

best index funds in India

Fund Size (AUM): ₹808 Crs
Age: 10 Yrs+
Expense Ratio: 0.1%
Min. Investment: SIP ₹100
1-year Performance: 19.27%
3-year Performance: 19.7%
5-year Performance: 13.33%
10-year Performance: 13.87%

Overview:

Among the best index funds in India, Bandhan Nifty 50 Index Fund is a good choice to consider. It tries to copy the Nifty 50 index fund, which includes the 50 biggest and most traded stocks in India. 

Experts manage the fund and keep costs low, making it a good, affordable way to invest in Indian stocks.

Suitable For: 

This fund is good for people who want to invest in a mix of big Indian companies from different areas. Since it’s cheap to own, you could make more money in the long run, making it a smart pick for a long-term investment plan.

4. Nippon India Nifty SmallCap 250 Index Fund Direct-Growth

best index funds in India

Fund Size (AUM): ₹502 Crs
Age: 2 Yrs+
Expense Ratio: 0.3%
Min. Investment: SIP ₹105, Lumpsum ₹105
1-year Performance: 28.24%

Overview:

The Nippon India Nifty SmallCap 250 Index Fund Direct-Growth aims to copy the Nifty SmallCap 250 index. This index is considered one of the best index funds in India. It has 250 smaller companies that could grow a lot. The fund invests in a mix of stocks that are similar to those in the index. This allows you to get in on the ground floor with rising companies. However, the direct plan is cheaper, so you can make more money over time.

Suitable For:

If you’re able to take some risks and plan to invest for a long time, the Nippon India Nifty SmallCap 250 Index Fund could be for you. It allows you to invest in smaller companies that have the potential to make you a lot of money over the years.

5. Nippon India Index Fund – Nifty 50 Direct – Growth

nifty 50 index fund

Fund Size (AUM): ₹943 Crs
Age: 10 Yrs+
Expense Ratio: 0.2%
Min. Investment: SIP ₹500
1-year Performance: 19.15%
3-year Performance: 21.98%
5-year Performance: 12.99%
10-year Performance: 13.58%

Overview:

Another best index fund in India is the Nippon India Index Fund – Nifty 50 Direct-Growth is a solid choice for those looking to invest in the Nifty 50 index fund, which includes 50 of India’s biggest companies. The fund aims to match the Nifty 50’s performance by investing in a mix of stocks that are similar to the index. 

The direct plan makes it a cheaper way to invest in some of the best-performing companies in the Indian market.

Suitable For:

If you’re a careful investor wanting to put money into steady, big-name companies in the Nifty 50 index fund, this fund is a good fit. The direct plan is cheaper to own, which could mean you make more money in the end.

6. Aditya Birla Sun Life Nifty 50 Index Fund Direct-Growth

Aditya Birla

Fund Size (AUM): ₹615 Crs
Age: 10 Yrs+
Expense Ratio: 0.32%
Min. Investment: SIP ₹105
3-year Performance: 21.71%
5-year Performance: 12.75%
10-year Performance: 13.14%

Overview:

Aditya Birla Sun Life Nifty 50 is another one of the best index funds in India. It aims to match the Nifty 50 index fund, which includes India’s 50 biggest companies. The fund keeps costs low with its direct plan, so you could end up making more money. 

It invests in stocks that are a lot like those in the Nifty 50, giving you a chance to grow your money with some of India’s top companies.

Suitable For:

If you want to invest in a fund that follows India’s 50 biggest companies, the Aditya Birla Sun Life Nifty 50 Index Fund is a good pick. It’s a smart choice for growing your money over the long term.

7. Axis Nifty 100 Index Fund Direct-Growth

best index funds in India

Fund Size (AUM): ₹927 Crs
Age: 3 Yrs+
Expense Ratio: 0.15%
Min. Investment: SIP ₹100
1-year Performance: 16.56%
3-year Performance: 21.22%

Overview:

The Axis Nifty 100 Index Fund Direct-Growth aims to match the Nifty 100 index, which includes the top 100 companies in India. It is one of the best index funds in India because the fund keeps costs low with its direct plan, so you can make more money. It gives you a chance to invest in a wide variety of big Indian companies.

Suitable For:

The Axis Nifty 100 Index Fund is a good fit for people who want to spread their money across India’s top 100 companies. It’s a great pick for those looking to save on costs.

8. HSBC Nifty 50 Index Fund Direct-Growth

nifty 50 index fund

Fund Size (AUM): ₹191 Crs
Age: 3 Yrs+
Expense Ratio: 0.2%
Min. Investment: SIP ₹500
1-year Performance: 16.56%
3-year Performance: 21.22%

Overview:

The HSBC Nifty 50 Index Fund Direct-Growth is one of the best index funds in India. It is a well-liked fund that tries to match the Nifty 50 index fund. It invests in a mix of stocks like those in the Nifty 50. Since the direct plan keeps costs low, you could end up making more money. However, the fund is known for being steady and good at making money over time.

Suitable For:

The HSBC Nifty 50 Index Fund is a good choice if you want a stable and steadily growing investment. Its direct plan is cheaper to own, which could mean you could get good returns.

9. UTI Nifty 200 Momentum 30 Index Fund Direct-Growth

UTI Nifty 200

Fund Size (AUM): ₹2,273 Crs
Age: 2 Yrs+
Expense Ratio: 0.41%
Min. Investment: SIP ₹500
1-year Performance: 24.65%

Overview:

The UTI Nifty200 Momentum 30 Index Fund Direct-Growth aims to match the Nifty200 Momentum 30 index. This index has 30 stocks picked for their strong price growth and variety of sectors, which make them one of the best index funds in India.

The fund invests in a mix of stocks similar to the index, giving you a chance to make money from these fast-growing stocks. Thus, you can get big returns because the direct plan is cheaper.

Suitable For:

If you’re able to accept some risk and like to invest in stocks that are going up in price, the UTI Nifty 200 Momentum 30 Index Fund could be a suitable choice for you. It allows you to invest in stocks that are on a strong upward trend.

10. Tata Nifty 50 Index Direct

nifty 50 index fund

Fund Size (AUM): ₹455 Crs
Age: 10 Yrs+
Expense Ratio: 0.2%
Min. Investment: SIP ₹500
1-year Performance: 19.17%
3-year Performance: 21.95%
5-year Performance: 13.05%
10-year Performance: 13.57%

Overview:

The Tata Nifty 50 Index Direct is the last recommendation for the best index funds in India, and aims to match the Nifty 50 index, including India’s top 50 companies. Since the fund keeps costs low with its direct plan, it is a great pick for those looking to grow their money over the long term without spending a lot on fees.

Suitable For:

The Tata Nifty 50 Index Direct is a good fit for people who want to invest in India’s 50 biggest companies without spending a lot on fees. It offers a simple and effective way to put your money in large companies.


How to Choose the Best Index Funds in India?

Investing in index funds has become increasingly popular in India, so it is important to pick the top index funds in India that suit your portfolio. Here’s a comprehensive guide to help you make an informed decision:

1. Know Your Investment Goals

Before choosing the best index funds in India, you need to have a clear understanding of your investment goal. Your goals will significantly influence the type of index fund that’s right for you.

2. Examine the Underlying Index

You need to look at the index that the fund aims to replicate. In India, popular indexes include the Nifty 50 and the S&P BSE Sensex. Make sure the index aligns with your investment strategy and risk tolerance.

3. Scrutinize the Expense Ratio

One of the most attractive features of index funds is their low expense ratios. However, not all index funds are created equal in this regard. A lower expense ratio can significantly enhance your overall returns, so make sure to compare this aspect when choosing a fund.

4. Consider the Fund House’s Reputation

While index funds are generally passively managed, the reputation of the asset management company can still make a difference. Look for fund houses known for their transparency, customer service, and overall reliability.

5. Review Past Performance

Although past performance is not a reliable indicator of future returns, it can provide some insights. Check how the fund has performed in various market conditions and how it compares to its benchmark index.

6. Diversification Matters

Some index funds offer broad market exposure, while others may focus on specific sectors or market segments. Depending on your investment goals and risk tolerance, choose a fund that provides the level of diversification you’re comfortable with.

7. Check the Minimum Investment Requirement

Most index funds have a minimum investment requirement. Make sure you are comfortable with this amount before making a decision.


Conclusion

The top index funds in India for 2023 offer a simple, low-cost way to get into the stock market and benefit from India’s economic upswing. Whether you’re a beginner or an experienced investor, adding one of the best index funds in India to your portfolio can be a smart move.

However, they have low fees and follow popular indexes like the Nifty 50 index fund, so you need to make smart choices and enjoy the benefits of these index funds.


FAQs

1. Which index funds are the best?

The best index funds in India often track popular indices like the Nifty 50 or S&P BSE Sensex. Look for low expense ratios and steady performance.

2. Are index funds a good investment in India?

Yes, index funds are generally a good investment in India. They offer a low-cost way to invest in the stock market and can provide stable returns.

3. Should I invest in S&P 500 Index Fund India?

Investing in an S&P 500 Index Fund can be a good way to diversify your portfolio, but keep in mind it exposes you to U.S. market risks.

4. Are index funds 100% safe?

No investment is 100% safe, but index funds in India are generally considered lower risk compared to individual stocks.

5. How can I buy index funds in India?

You can buy index funds through a brokerage account or directly from a fund house. Both direct and regular plans are available.


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By FinxpdX Team
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