Best Index Funds - Consider the best performing index mutual funds to invest in 2023 with Scripbox.com. Find the list of best index funds in India on the basis of Returns, Latest Nav, Ratings, Performance, etc.
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| Best Index Funds | 3Y Returns | AUM |
| UTI Nifty Index Fund | 14.3% | 9337 Cr |
| HDFC Index Nifty 50 Fund | 14.1% | 7411 Cr |
| SBI Nifty Index Fund | 13.8% | 3167 Cr |
| HDFC Index Sensex Fund | 13.7% | 4141 Cr |
| Axis Nifty 100 Index Fund | 13.5% | 893 Cr |
| Kotak Nifty 50 Index Fund | NA | 251 Cr |
| UTI Nifty Next 50 Index Fund | 13.6% | 2087 Cr |
| ICICI Prudential Nifty Index Fund | 14.1% | 3927 Cr |
| SBI Nifty Next 50 Index Fund | NA | 463 Cr |
| IDBI Nifty Index Fund | 13.3% | 201 Cr |
An index fund is a type of mutual fund that invests in a broader market index – like the Sensex OR Nifty. Moreover, all the stocks forming part of the Sensex and/or Nifty will become a part of the investment portfolio. These funds help investors in getting exposure to a broader market segment at a lesser cost.
The indices, Sensex and Nifty represent top companies based on their free-float market capitalization. Since the companies in both the indices are highly reputed and revenue-generating, investors wish to get benefitted from the same. Since these indices are not stocks but an index, investors need to invest in the index constituents in the same weight as the index.
An Index fund tracks a broader market index such as Sensex or Nifty and their portfolio will comprise the same stocks as in the Sensex or Nifty in the same proportions. Index funds are also known as passive funds since they track a particular index and do not require a high level of management of the fund.
The fund manager, who is managing the fund investments looks after the stocks which have to be bought or sold according to the composition of the underlying benchmark. As far as the return is concerned, the fund and the index deliver almost the same return. The difference between the two leads to the origination of tracking error which the fund manager tries to minimize.
Investors need to analyze their investment goals and understanding of risk before making an investment in index funds. However, below are a few points and investor might consider:
The procedure for investing in index funds is no different from investing in other mutual funds. However, depending on your knowledge and time constraints, investors can opt for either below methods:
A capital gain arises on the redemption of units of the index fund. The gains can either be short-term or long-term depending on the holding period of the units.
If the units are sold within a period of 1 year from the date of the allotment, this would give rise to short-term capital gain and is taxed @ 15%. Furthermore, the long-term capital gains are taxed @10%, above Rs, 1,00,000 without the benefit of the indexation.
For example, if there is a long-term capital gain of Rs. 2 lacs and the investor withdraws this amount after a year of investment, the tax will be levied on Rs. 1 lac and the amount payable will be Rs. 10,000.
1. HDFC Index Nifty 50
2. UTI Nifty Next Index Fund Regular Growth
3. SBI Index Fund Regular Growth
4. Axis Nifty 100 Index Fund
5. Kotak Nifty 50 Index Fund
Index funds work for investors who have a long-term investment horizon. It is important to stick to the investment period as decided by the investor in order to have a better return.
Investing in an index fund requires a bit of research. Below are few points that the investors can consider to choose the best index funds:
1.It is better to opt for index funds in case the investor is looking for a balanced portfolio. In this way investors will have equity for long-term growth, bonds for stability and index funds as a balance between the two.
2.The fund house should have a solid investment background for index funds. It is important to be aware of the history of the fund house like the management team returns. etc.
Most index funds do not give the option of dividend payout.
For most of the investors, if your investment horizon is long-term, you can invest anytime. However there is no set methodology to follow for making the investment. It is dependent on the current market scenarios.
Index funds can provide a better return over a long-term horizon as compared to short term. The average rate of return on index funds is generally around 7-10%.
