best nifty index funds in india

If you are seeking the best Nifty Index Funds in India 2024 to invest in, you have come to the right place. Below is a list of the top Nifty Index Funds in India for 2024, including essential details to know before investing.

1. ICICI Prudential Nifty Index Fund

The ICICI Prudential Nifty Index Fund is the leading Nifty Index Fund in India for 2024. This open-ended fund was launched on January 1, 2013, and can be invested in at any time. As of 2022, the total AUM for this Scheme is Rs 2243.32 crores, and the NAV as of 03 Dec 2022 is Rs 174.0395.

Investment Objective

The fund's objective is to replicate or track the S & P Nifty index returns.

Where Does the Scheme Invest?

The ICICI Prudential Nifty Index Fund primarily invests 99.71% in equities and 0.29% in cash and cash equivalents. The fund largely invests in 100% large-cap companies following a growth-oriented investing style.

Benchmark

Nifty 50 Total Return Index (TRI)

Expense Ratio

0.17%

Risk

Moderately High

Suggested Investment Horizon

>3 years

One-Time Investment Returns in the Last 5 Years:

Absolute Returns: 120.52%
Annualised Returns: 17.12%

2. UTI Nifty Index Fund

The UTI Nifty Index Fund is another popular Nifty Index Fund in India. This scheme was launched on January 2, 2013, and had a total AUM of 5380.08 crores as of 2022. The current NAV is Rs 115.5983.

Investment Objective

The fund's objective is to follow the Nifty 50 Index to achieve equivalent returns.

Where Does the Scheme Invest?

The UTI Nifty Index Fund asset allocation is -100.21% in equities and -0.18% in cash and cash equivalents. The top ten equity holdings form 58.48% of the assets, and the top three sectors form 68.06% of the assets.

Benchmark

Nifty 50 TRI

Expense Ratio

0.2%

Risk

High

Suggested Investment Horizon

>3 years

One-Time Investment Returns in the Last 5 Years:

Absolute Returns: 122.79%
Annualised Returns: 17.35%

3. HDFC Nifty Index Fund

The HDFC Nifty Index Fund, which commenced on Jan 1, 2013, has total assets under management (AUM) of 4084.93 crores in 2022. As of 03 Dec 2022, the net asset value (NAV) is Rs 160.9972.

Investment Objective

The investment objective of this fund is to provide returns equivalent to the NIFTY 50 Index.

Asset Allocation

The scheme's asset allocation comprises 99.78% equities and 0.22% cash & cash equivalents. The top ten equity holdings form 58.24% of the assets, and the top three sectors form 67.78% of the assets.

Benchmark

The benchmark for this fund is Nifty 50 TRI.

Expense Ratio

The expense ratio for this fund is 0.2%.

Risk

The risk associated with this fund is moderately high.

One-Time Investment Returns in the last 5 years:

Absolute Returns: 122.11%
Annualised Returns: 17.28%

4. SBI Nifty Index Fund

The SBI Nifty Index Fund has assets under management (AUM) of Rs 1,608.84 Crores in India. The current NAV is Rs 153.8028.

Investment Objective

The investment objective of this fund is to invest in all the stocks forming the Nifty 50 Index in the weightage in the index.

Asset Allocation

The asset allocation for this fund is as follows:
Large Cap Investments: 89.53%, Mid Cap Investments: 0.63% and others than small-cap: 9.45%

Benchmark

The benchmark for this fund is Nifty 50 TRI.

Expense Ratio

The expense ratio for this fund is 0.18%.

Risk

The risk associated with this fund is very high.

One-Time Investment Returns in the last 5 years:

Absolute Returns: 120.40%
Annualised Returns: 17.10%

5. LIC MF Nifty Index Fund

The LIC MF Nifty Index fund has been providing investors with lucrative returns since its launch on Jan 1, 2013. With a fund size of Rs 52.95 crores and a current NAV of Rs 99.0846 as of 03 Dec 2022, this fund is a strong contender for the best Nifty index fund in India for 2023.

Investment Objective

The investment objective of this fund is to generate returns equivalent to the index Nifty fund.

Asset Allocation

This fund's asset allocation is strategically divided to comprise of large-cap investments: 89.78%, mid-cap investments: 0.63%, and others than small-cap investments: 9.48%. Such diversification allows for investors to benefit from a range of investments across the market.

Benchmark

This fund's benchmark is the Nifty 50 TRI index, which has proven to be a reliable benchmark for the Indian stock market.

Expense Ratio and Returns

This fund has an expense ratio of 0.21%, which is relatively low in comparison to other mutual funds. Furthermore, the one-time investment returns in the last 5 years for this fund have been impressive, with absolute returns of 116.92% and annualized returns of 16.73%.

A Quick Comparison 

Let us look at the SIP annualized returns for 3 years and 5 years: 

Fund Name3 Years SIP Annualised Returns5 Years SIP Annualised Returns
ICICI Prudential Nifty Index Fund – Direct Plan-Growth24.65%18.19%
UTI Nifty Index Fund – Direct Plan-Growth24.71 %18.33 %
SBI Nifty Index Fund – Direct Plan-Growth 24.4 %18.04%
HDFC Index Fund – Direct Plan – Nifty 50 Plan 24.56 %18.22%
LIC MF Index Fund – Nifty Plan – Direct Plan-Growth24.21 %17.79%

Mutual fund investments are a crucial aspect of one's financial planning journey, catering to different risk appetites and investment goals. For investors with a low-risk profile, index funds can be an ideal choice, providing predictable returns in the long run. If you wish to avoid the risks associated with actively managed equity funds, Nifty index funds can be your go-to option.

Understanding Index Funds

Index mutual funds track a stock market index such as Nifty, Sensex, and more. These funds are passively managed, which means they do not require extensive research like actively managed funds. The fund manager does not actively choose stocks but invests in the stocks present in the underlying index.

For instance, if an Index Fund is following the NSE Nifty Index, it will include 50 stocks in its portfolio in the exact proportion of the index. An index can consist of equity, equity-related securities, and bonds, and it aims to match the returns provided by the underlying index.

Benefits of Investing in Index Mutual Funds

  • Low Expense Ratio: As these funds are passively managed, the expense ratio is generally 0.50%.
  • Effective Risk Distribution: Index mutual funds are an excellent option for risk distribution as they diversify your investments across multiple industrial sectors.
  • Quality Investments: Indexes include quality stocks (outperformers) only, making index funds a quality investment.

Suitability for Index Funds

Investors can select index mutual funds based on their investment horizon, financial goal, and risk appetite. Index mutual funds are ideal for risk-averse investors ready to invest for at least five years. Investors who want higher returns than fixed deposits can also invest in index funds.

Taxation on Index Funds

If you sell the fund units after one year from the purchase date, and the gain exceeds one lakh, it will be considered long-term capital gain and taxable at 10%. If you sell the units within one year from the purchase date, the gain will be considered a short-term capital gain, and the tax rate will be 15%. Additionally, if dividend income exceeds Rs 5,000 in a year, TDS at 10% will be deducted.

Conclusion

I have walked you through the best Nifty Index Funds in India in 2024 and also, explained the various essential details for each of these Index Funds. You can compare and choose the best Nifty Index Funds for you to invest in.

Frequently Asked Questions (FAQs)

What are the risks involved in Index Funds?

As with any investment, index funds do carry some risks. Here are some common risks associated with index funds:

Tracking errors

Index funds are designed to track a market index, such as Sensex or Nifty, by investing in all the index securities in the same proportion to provide aligned returns to the index. However, this means that the returns from index funds are subject to tracking errors. They cannot add an undervalued stock or remove an overvalued stock to take advantage of the market, unlike actively managed funds.

Transaction cost

When an index alters the composition by adding or removing some securities, it does not incur any cost. But when an index fund mirrors that of the index, it has to bear transaction costs to change the portfolio composition which affects the fund’s returns.

Time lag

Most index funds lag their benchmark returns due to tracking errors. When an index changes the security composition or weightage of individual security, there is a high possibility of time lag. It affects the Index Fund’s return negatively.

What should an investor consider while investing in Index funds?

While index funds offer a low-cost, low-risk investment option, they do have some cons due to their passive style of investing. An investor needs to consider the following points while investing in index funds:

  • Index funds do not offer flexibility to manage market downsides.
  • An index fund has to follow the benchmark during bull and bear runs.
  • An active fund manager has the flexibility to choose stocks in unfavorable market conditions and manage the downside.
  • But an index fund is bound to follow the benchmark, even during market downs.

Can investors switch from one fund to another?

Yes, investors can switch from one fund to another. If you want to switch within the same fund house, you can fill up a switch form, and the settlement period is quick as the funds do not move out of the house. However, investors need to bear the exit load and capital gains tax.

If you want to switch from one fund house to another, it is treated as selling your investments. In this case, you need to apply for redemption from the existing fund and wait for proceeds credit to your bank account. Make sure you consider exit loads and tax treatment before you redeem the investments. To switch efficiently, you can seek help from fund advisors and invest in suitable funds within your time horizon.

How will I evaluate my risk profile?

It is crucial to evaluate your risk profile before investing as every investor is unique concerning investment objectives and risk. You need to answer the questions about your ability and readiness to take the risk. Investors can seek help from an investment advisor to evaluate their risk profile.

What is the Scheme Information Document issued by AMCs?

An Asset Management Company (AMC) issues three important documents with the approval of the SEBI (Securities and Exchange Board of India) that every investor should go through before investing in mutual funds: Scheme Information Document (SID), Key Information Memorandum (KIM), and Statement of Additional Information (SAI).

The SID consists of investment objectives and policies, asset allocation, charges and liquidity provisions, the fund

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