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List of Index Mutual Funds in 2024

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Fund name
AUM
1Y CAGR
3Y CAGR
Till Date CAGR
aditya-birla-sun-life-logo
Aditya Birla Sun Life Nifty Next 50 Index Fund (G)

105.957 Cr

62.6%

-

26.6%

bandhan-bank-logo
Bandhan Nifty100 Low Volatility 30 Index Fund (G)

494.548 Cr

32.9%

-

24.5%

sbi-logo
SBI Nifty Smallcap 250 Index Fund (G)

746.907 Cr

59.5%

-

38.9%

Navi_Fav_icon-logo
Navi Nifty 50 Index Fund (G)

1846.799 Cr

26.2%

-

14.8%

uti-logo
UTI Nifty Midcap 150 Quality 50 Index Fund (G)

202.421 Cr

40.3%

-

15.6%

edelweiss-logo
Edelweiss Nifty Midcap150 Momentum 50 Index Fund (G)

274.448 Cr

72.1%

-

46.4%

axis-logo
Axis Nifty Midcap 50 Index Fund (G)

313.068 Cr

53.9%

-

29.7%

Navi_Fav_icon-logo
Navi Nifty Next 50 Index Fund (G)

288.764 Cr

62.7%

-

22.4%

aditya-birla-sun-life-logo
Aditya Birla Sun Life Nifty Midcap 150 Index Fund (G)

196.372 Cr

55.8%

24.8%

28%

icici-prudential-logo
ICICI Prudential Nifty Midcap 150 Index Fund (G)

436.554 Cr

54.7%

-

25.3%

reliance-nippon-life-logo
Nippon India Nifty Alpha Low Volatility 30 Index Fund (G)

362.993 Cr

49.4%

-

31.1%

bandhan-bank-logo
Bandhan Nifty200 Momentum 30 Index Fund (G)

63.044 Cr

66.5%

-

38.1%

edelweiss-logo
Edelweiss Nifty Smallcap 250 Index Fund (G)

52.804 Cr

59.6%

-

40%

aditya-birla-sun-life-logo
Aditya Birla Sun Life Nifty 50 Equal Weight Index Fund (G)

273.837 Cr

36.1%

18.4%

18.3%

axis-logo
Axis Nifty Smallcap 50 Index Fund (G)

310.568 Cr

70.7%

-

27.1%

edelweiss-logo
Edelweiss Nifty Next 50 Index Fund (G)

34.591 Cr

62.4%

-

35.4%

icici-prudential-logo
ICICI Prudential Nifty Smallcap 250 Index Fund (G)

299.36 Cr

59.4%

-

21.1%

hdfc-logo
HDFC NIFTY Next 50 Index Fund (G)

604.962 Cr

62.8%

-

20.3%

motilal-oswal-logo
Motilal Oswal Nifty 200 Momentum 30 Index Fund (G)

489.467 Cr

67.5%

-

26.1%

uti-logo
UTI BSE Sensex Index Fund (G)

168.313 Cr

23.2%

-

13.6%

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What is an Index Fund? 

An index fund is a type of mutual fund that invests in a broader market index – like the Sensex or Nifty. It means index funds invest in the same securities as the benchmark index and in the same ratio. For example, an index MF that aims to track the Nifty 50 index will invest across the same 50 companies in the same proportion. Thus, replicating the index performance. These funds help investors get exposure to a broader market segment at a lesser cost.

Since these funds replicate the underlying benchmark index, they are passively managed funds. The fund manager aims to replicate the index with minimum tracking error. Thus, the funds are free from any fund manager bias or decisions. Furthermore, as these funds are passively managed, the expense ratio is much lower in comparison to actively managed funds. 

Index MFs are a good investment to achieve diversification. Diverse stock composition is what makes a benchmark index. Thus, investing in these funds will help you achieve higher diversification and generate benchmark returns, if not more.

How Does an Index Fund Work? 

Index Funds track a particular index or benchmark. An index defines a market segment. These segments are either equity-oriented instruments like stocks or bond market instruments. For example, an Index fund tracking NIFTY will have the same 50 stocks that NIFTY comprises and in the same proportion. These funds track a particular benchmark and, hence fall under the passively managed funds. The fund manager doesn’t pick the stocks and just mimics the benchmark. The fund management team aims to maintain the composition of the underlying benchmark.

Returns from these funds are more or less equal to the benchmark’s. However, there would be a slight difference in the performance, known as the tracking error. The best fund would be the one with the least tracking error. In general, these funds have a low expense ratio compared to actively managed funds. Also, all future inflows are invested in the same proportion of the underlying index.

Index Mutual Funds in India can be of two types Index Mutual Funds and Index Exchange Traded Funds.

Who Should Invest in Index Funds?

Index funds aim to match the performance of a benchmark. A stock market index benefits an investor in the long term. Hence, these funds best suit investors who are looking to invest for the long term, ideally for retirement. These funds are also ideal for investors who prefer earning foreseeable returns. Considering these funds do not have a lot of risk in them, they are a perfect option for risk-averse investors looking for some equity exposure. Also, index funds are passively managed funds that do not require monitoring of the portfolio.

On the other hand, an actively managed fund’s portfolio is based on the fund manager’s predictions and involves an element of risk. Actively managed funds require continuous monitoring of the portfolio. Hence, index funds also suit investors who wish to invest and forget about the investment for a long time. The returns from index funds match that of the benchmark, and investors cannot expect higher returns than the benchmark. Hence, for investors looking for higher returns, actively managed funds can be preferred.

Advantages of Investing in Index Funds

The following are the advantages of investing in index funds:

Low Expense Ratio: One of the biggest advantages of index funds is that they have a low expense ratio. The expense ratio is the fees that the fund house charges investors for managing the fund. Since these MFs are passively managed, the expense ratio is lower, as the fund manager merely mimics the underlying index. 

No Fund Manager Bias: Since these are passively managed funds that mimic the benchmark index, the fund manager doesn’t have to spend time and energy picking the funds for the portfolio. In the case of actively managed funds, the fund manager’s analysis and decision-making largely impact the fund’s returns. However, that isn’t the case with these funds. Instead, the fund manager must simply mimic the benchmark with minimum tracking error. 

Broad Market Exposure: A benchmark comprises stocks representing the market/ sector as a whole. Investing in a fund that tracks the benchmarks gives exposure to a wide range of stocks that define the market movement as a whole. 

Easy to Manage: Index funds are easy to manage for both the investor and the fund manager. Investors need not worry about tracking the performance of the fund and the fund manager. Since these funds replicate the benchmark, investors can expect returns close to the benchmark returns. 

Limitations of Investing in Index Funds

The following are the disadvantages of investing in Index Funds:

Lower Flexibility: During a market slump, the fund manager doesn’t have the liberty to change the portfolio allocation to minimize the negative impact. Thus, these funds do not offer any flexibility to the fund manager. 

Underperformance: These funds are often at a high risk of underperforming the benchmark it is tracking. This is because of the higher trading costs, fees, expenses and tracking errors. 

Tracking Error: Another significant risk that index funds have is tracking error. Tracking error refers to the inaccuracy in tracking the underlying benchmark. 

How to Invest in an Index Fund?

You can invest in an Index fund either through the online or offline route. But before you invest, you need to pick the right index and the right fund that tracks the index (of your choice). An index fund with minimum tracking error can be a good investment. Here’s how you can invest in an index fund:

  • Offline Mode: This basically means making the investment through a broker or distributor. If opting for this mode, the investments are made through regular plans, which have different returns and expense ratios. Alternatively, investors may invest by filling out an application form for the desired scheme and submitting it to the authorized collection centre of the mutual fund.
  • Online Mode: In this mode of investment, investors can visit the respective AMC’s website or an online aggregator like Scripbox and choose the funds from there. The various funds offered by the AMC can be compared with each other in terms of returns, history of the fund etc. and can make the investment accordingly.

You can invest in Scripbox’s recommended best index mutual funds in India by following the below-mentioned steps:

  • Login to Scripbox
  • Click on ‘Invest’
  • Begin your investment journey by choosing ‘A plan to invest in’ or ‘I want to choose my own funds’
  • Select the mode of investment i.e., monthly SIP, one time or STP
  • Enter the amount of investment
  • Based on the amount of investment, the recommended funds will be provided. You can change the funds and the distribution of the amount
  • Select the payment mode and complete the transaction to set up your investment. 

Types of Index Funds

The following are the types of Index Funds:

  • Broad Market Index Funds: The funds replicate a large section of the market. These funds tend to have a lower expense ratio and, at the same time, are tax efficient. These are popular among investors looking for a large variety of stock or bond exposure.
    • Nifty 50 Index Fund: The Nifty 50 Index Fund is a mutual fund that pools funds to invest in the shares of the top 50 companies listed on the National Stock Exchange (NSE) of India. These funds mirror the performance of the Nifty 50 index, reflecting the overall market dynamics of these 50 companies.
    • Sensex Index Fund: The Sensex Index Fund is a mutual fund that pools funds to invest in the shares of the top 30 companies listed on the Bombay Stock Exchange (BSE) of India. These funds mirror the performance of the Sensex index, reflecting the overall market dynamics of these 30 companies. 
    • Nifty 500 Index Fund: The Nifty 500 Index Fund is a mutual fund that pools funds to invest in the shares of the top 500 companies listed on the National Stock Exchange (NSE) of India. These funds mirror the performance of the Nifty 500 index, reflecting the overall market dynamics of these 500 companies.
    • Nifty IT Index Fund: The Nifty IT index is a benchmark that captures the performance of the Information Technology (IT) segment in India. The Nifty IT Index Fund is a mutual fund that pools funds to invest in the shares of the top 10 IT companies listed on the National Stock Exchange (NSE) of India. These funds mirror the performance of the Nifty IT index, reflecting the overall market dynamics of the IT sector in India.
  • Market Capitalization Index Funds: These funds mimic indexes based on their market cap. For example, market capitalization-based index MFs replicate the large-cap index, mid-cap index, and small-cap index. Here, a large portion of the funds is exposed to a particular market cap, large, mid or small-cap stocks.
    • Large Cap Index Fund: Large cap index funds track different large-cap indices such as NIFTY 50, SENSEX, NIFTY Next 50, NIFTY 100, etc. These funds have exposure to the top 100 stocks by market capitalization. 
    • Mid Cap Index Fund: A midcap index is a benchmark that includes companies ranked between 101st and 250th in terms of market capitalization. Mid cap index funds track different mid-cap indices such as the Nifty midcap, Sensex midcap index, etc. 
    • Small Cap Index Fund: The small cap index is a benchmark that includes companies ranked above 250 in terms of market capitalization. Small-cap index funds aim to track different small-cap indices like NIFTY Smallcap 250, BSE 250 Smallcap, etc.
  • International Index Funds: These funds track and mimic the global indices. International index MFs give exposure to international markets and companies. Thus, allowing an investor to diversify across emerging markets and countries. 
  • Earnings-based Index Funds: These funds track indices based on their profit-generating capacity. They mimic growth and value indexes. The growth index comprises companies that have a good potential to generate profits. On the other hand, the value index comprises stocks that are currently trading at a lower value than their actual worth. 
  • Bond-based Index Funds: Bond-based index funds mimic the bond indices. These are comparatively low-risk investment options than equity index MFs. These funds invest across government and corporate bonds. Furthermore, they can have a defined maturity.

Index Fund Returns

Index funds aim to track the underlying benchmark as closely as possible. Thus the returns are quite close to that of the underlying benchmark. However, index funds offer slightly lower returns than that of the index, this is because of the tracking error.

Tracking error is the difference between the return of the index and the index fund. A fund with a lower tracking error often generates returns closest to the benchmark index. Higher tracking error refers to a greater difference in the returns. 

And, since index funds only mimic the portfolio of the underlying benchmark, they do not aim to generate benchmark-beating returns.

You can estimate the potential returns from an index fund using Scripbox’s Index Fund SIP Calculator

Taxation on Index Fund

The redemption of units of index funds is taxable as a capital gain. Also, the tax rate depends on the holding period of the units of the fund.

  • Short Term Capital Gains (STCG): STCG arises when the investment holding period is less than 12 months. The tax rate is 15% on the amount of gain earned.
  • Long Term Capital Gains (LTCG): LTCG arises when the investment holding period is more than 12 months. The tax rate is 10% for gains 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 tax payable will be Rs. 10,000.

How to do SIP in an Index Fund?

To start SIP in an Index Fund, you must first shortlist the suitable index fund that meets your investment goals. Upon shortlisting the fund, you can invest either through offline or online mode. While investing, you must determine how much amount (SIP amount) you wish to invest in the Index fund and the frequency of the SIP. 

Next, set up your SIP by providing a bank mandate to auto-debit the set amount and frequency. 

Upon successful application and mandate, your SIPs will start in the index fund for the duration you intend to invest. 

Nifty Bees Vs Index Fund

The main difference between Nifty Bees and Index Fund is the type of fund they are. Nifty Bees is an Exchange Traded Fund (ETF) that tracks the Nifty benchmark and trades on the stock exchange. While, an index fund is a mutual fund that mimics the benchmark portfolio to generate benchmark returns. Index funds do not trade on the stock market. 

Since Nifty Bees trade on the stock market, you can buy and sell the ETF units just like shares. While, for index funds, you can purchase them at the NAV. 

ETF Vs Index Fund

The primary difference between an ETF and an index fund is their structure. Index funds replicate stock market indices. They hold more liquid assets and cash than ETFs, leading to a slight performance difference known as tracking error.

Exchange Traded Funds (ETFs) resemble mutual funds and mirror index compositions. The difference between an ETF and an index fund is that ETFs are traded on the stock exchange. Thus, to invest in an ETF, you will require a demat account.

Frequently Asked Questions

Can you lose money in an index fund?

Index funds are passively managed funds that replicate the portfolio of the benchmark based on a diversified portfolio. The risk of losing money in an index funds is relatively low. This is because index funds are highly diversified mirroring the underlying stock index. The top companies form the index. Such companies have a higher growth and revenue potential. It is very unlikely that the market value such companies would at once fall to zero or nil. Furthermore, an index fund is designed to be held for a long duration that may extend to 10 years in order to avoid short term market fluctuation and losing money on the investment.

Is it worth investing in index funds?

Yes, it is worth investing in Index Funds for investors who are seeking moderate returns without being exposed to a very high level of volatility. Index funds are suitable for investors wish to invest in a stock market index but do not possess the time or knowledge to manage the changing index and its weights for their investment. The index fund replicates an index and thereby replaces an investor’s efforts of continuously monitoring and revisiting portfolio.

How do you get money from index funds?

You get money from index funds in form of returns through passive investment. The fund replicates and tracks a particular stock index or benchmark comprising of large cap companies across different industries. In a way you earn returns similar to the movement of the stock index on the stock market. This is how you earn money from index funds. The low risk comes from the portfolio diversification of the selected benchmark.

How do you create an index fund?

Index funds are already created by the fund managers and investors need only to select their most appropriate one. Index funds are created by replicating the stock market index. It replicates the types of companies, their composition, proportion, weightage. Hence, the stock holding or asset allocation of an index fund is actually a proxy of the stock market index.
The fund managers work on maintaining the composition of the stock market index for a well-diversified investment portfolio to secure returns to the fund investors.

How do I choose an index fund?

While choosing an index fun you need to consider a few factors. To begin with first of all make sure that index funds suit your investment goals. Index funds are suitable for investors investors who are looking to invest for the long term, ideally for retirement. These funds are also an ideal option for investors who prefer earning foreseeable returns. It is a perfect option for risk-averse investors looking for some equity exposure. The next step is to select the stock market index in which you wish to invest. Now, to select the index fund that benchmarks to the stock market index chosen by you. Further, you must consider the fund manager’s track record, historical returns, consistency of returns, relative size i.e., AUM, etc.

How long should you hold index funds?

Index Funds are more suitable for long term investments that might be extended for 10 years or longer. This was you can aim for capital appreciation in the long term and avoid volatility in the short term.

Do index funds pay a dividend?

Most index funds do not pay dividends. The ones that pay haven’t been consistent with their payouts.

Should I buy the index funds when the market is down?

For most investors, if your investment horizon is long-term, you can invest at any time. However, there is no set methodology to follow for making the investment. It is dependent on the current market scenarios. Also, the SIP route is the ideal way to invest in mutual funds. Setting up an SIP will help you invest regularly, and as a result, you do not have to worry about timing the market. You will be investing consistently, irrespective of the market movements.

What is the average rate of return on index funds?

Index funds can provide a better return over a long-term horizon as compared to the short term. The average rate of return on index funds is generally around 7-10%.

Are the lowest expense ratio index funds the best?

Yes, index funds with low expense ratios and tracking errors have the potential to generate returns close to that of the underlying benchmark index. However, you must also consider the historical performance of the fund (consistency in the returns), the fund manager’s track record, the fund’s AUM etc.

What is an SIP index fund?

SIP in an index fund refer to investing a specified amount regularly (at pre-determined intervals) in the fund. You can set your SIP frequency as daily, weekly or monthly.

Should a beginner invest in index funds?

Yes, index funds are a great investment option for beginners. If you do not understand the nuisances of the stock market and don’t have the time and knowledge to track your investments, index mutual funds are the best way to start your investment journey. 
Since index funds replicate the portfolio of a benchmark, they have a well-diversified portfolio. And since they are managed by fund managers, you need not worry about tracking the stock performance and rebalancing the portfolio.

How to add index funds to your portfolio?

Depending on your investment goal, pick an index (benchmark) that you wish to invest in. Next, pick a fund that closely tracks the underlying benchmark. Let’s say you have a 5-year investment horizon and you wish to invest in large-cap stocks. You can pick an index fund that tracks Nifty 50 or Sensex. 
You must shortlist a suitable fund based on low expense ratio and tracking error, consistent performance (historical returns), fund manager’s track record, fund’s AUM, etc. Based on these factors, choose a fund and invest either through SIP or the lumpsum route (as per your requirement).

Index fund vs mutual fund – which is better?

Index funds are a type of mutual fund that represents a distinct approach to investing. While both involve pooling money from various investors to create a diversified portfolio, the key difference lies in their management strategies. Index funds passively track a specific market index, aiming to replicate its performance with minimal fees. 

In contrast, mutual funds employ active management, with fund managers making strategic decisions to outperform the market. Index funds generally offer lower costs and are suitable for long-term, suitable for investors seeking market returns. Mutual funds, with potentially higher costs, are favored by those seeking actively managed portfolios and potential outperformance.

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