Index mutual funds have lower expense ratio than actively managed funds. Here is a list of top 20 index mutual funds with lowest expense ratio in May 2025
Note : *NA implies that Fund is relatively new. Not enough data available
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Below are the best low cost index funds in india:
SBI Nifty Bank Index Fund Direct (G) is a Equity fund. The fund has an expense ratio of 0.2% and an AUM of ₹112 crores as of 2025-05-13. It was Launched on 2025-02-06. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 100.07% to equities and -0.07% to other assets.
ICICI Prudential CRISIL-IBX Financial Services 3-6 Months Debt Index Fund Direct (G) is a Equity fund. The fund has an expense ratio of % and an AUM of ₹575 crores as of 2025-05-13. It was Launched on 2025-03-19. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000.
Bandhan CRISIL-IBX Financial Services 3-6 Months Debt Index Fund Direct (G) is a Equity fund. The fund has an expense ratio of % and an AUM of ₹437 crores as of 2025-05-13. It was Launched on 2025-03-13. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000.
Edelweiss MSCI India Domestic & World Healthcare 45 Index Fund Direct (G) is a Equity fund that has delivered a 1 Year return of 11.2% and a 3 Years return of 17.2%. The fund has an expense ratio of 0.5% and an AUM of ₹160 crores as of 2025-05-13. It was Launched on 2020-10-26. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 99.62% to equities, 0.06% to debt and 0.32% to other assets.
Motilal Oswal Nifty Bank Index Fund Direct (G) is a Equity fund that has delivered a 1 Year return of 13.6%, a 3 Years return of 16.7% and a 5 Years return of 22.8%. The fund has an expense ratio of 0.3% and an AUM of ₹634 crores as of 2025-05-13. It was Launched on 2019-09-06. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 100.07% to equities, 0.05% to debt and -0.12% to other assets.
Navi Nifty India Manufacturing Index Fund Direct (G) is a Equity fund that has delivered a 1 Year return of 4.5%. The fund has an expense ratio of 0.2% and an AUM of ₹53 crores as of 2025-05-13. It was Launched on 2022-08-29. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 99.81% to equities and 0.19% to other assets.
Bandhan Nifty IT Index Fund Direct (G) is a Equity fund that has delivered a 1 Year return of 10.1%. The fund has an expense ratio of 0.4% and an AUM of ₹24 crores as of 2025-05-13. It was Launched on 2023-08-31. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 99.79% to equities, 0.00% to debt and 0.21% to other assets.
ICICI Prudential Nifty IT Index Fund Direct (G) is a Equity fund that has delivered a 1 Year return of 10.0%. The fund has an expense ratio of 0.4% and an AUM of ₹503 crores as of 2025-05-13. It was Launched on 2022-08-18. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 99.93% to equities and 0.07% to other assets.
ICICI Prudential Nifty Pharma Index Fund Direct (G) is a Equity fund that has delivered a 1 Year return of 14.3%. The fund has an expense ratio of 0.4% and an AUM of ₹83 crores as of 2025-05-13. It was Launched on 2022-12-14. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 99.85% to equities and 0.15% to other assets.
Bandhan Nifty Bank Index Fund Direct (G) is a Equity fund. The fund has an expense ratio of 0.2% and an AUM of ₹16 crores as of 2025-05-13. It was Launched on 2024-08-27. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 100.39% to equities, 0.01% to debt and -0.40% to other assets.
Low-Cost Index Mutual Funds offer a passive investment approach, tracking a specific market index, and have become a preferred choice for many investors. In this article, we will explore Low-Cost Index Funds in India, including what they are, how to invest in them, the returns they offer, and the reasons to consider them as part of your investment portfolio.
Low-Cost Index Funds are a type of mutual fund that aims to replicate the performance of a specific market index, such as the Nifty 50 or the Sensex. Index funds follow a passive investment strategy, unlike actively managed funds, which rely on fund managers to pick and choose individual stocks. This means that the fund’s portfolio mirrors the composition of the chosen index, offering investors broad market exposure.
The term ‘low-cost’ refers to the minimal fees associated with these funds. Since index funds don’t require active management decisions, the expenses are significantly lower compared to actively managed funds. This cost efficiency makes Low-Cost Index Funds an attractive option for those looking to maximize returns without incurring high fees.
Investing in a Low-Cost Index Fund in India is a straightforward process. You can invest either through the offline or online route. For offline, you will have to submit the investment form at the fund house office or find an agent to do it for you. On the other hand, you can invest in low-cost index funds from the comfort of your home. Directly invest from the asset management company’s website or through online platforms that enable mutual fund investing. Here are the key steps to get started:
One of the primary attractions of a Low-Cost Index Fund is the potential for competitive returns. These fund returns are quite close to that of the underlying benchmark’s returns. While they may not outperform the market, they aim to replicate its performance. Historically, index funds have demonstrated consistent returns over the long term, making them an appealing option for investors seeking stability and gradual wealth accumulation.
It’s important to note that the returns on Low-Cost Index Funds are closely tied to the performance of the underlying index. You should have a realistic expectation of market returns and understand that the fund’s performance will mirror the ups and downs of the broader market. Also, when picking a fund, it’s best to opt for the lowest expense ratio index funds in India. However, there are other parameters that you should be considering. Consider other factors like consistency in performance, fund manager’s reputation, AUM size, etc.
The following are the reasons why Low-Cost Index Funds are an attractive investment option:
Low-cost index funds in India present an investment option for those seeking a cost-effective and passive approach to wealth creation. By understanding the basics of these funds, you can make informed decisions that align with your financial goals and risk tolerance and generate significant returns in the long term.
