10 Best Index Funds in India to Invest (2024 Updated List)

The outlook of Index funds has evolved in the market as of 2024 since their popularity has increased among investors due to their diversified portfolio benefits, extensive market exposure, and simplicity. These are some of the cost-efficient ways for investors to increase their wealth without stressing over the market.

In this blog, we will explore the top 10 best index funds in India that will help you make informed investing decisions and how to leverage them in your investment portfolio.

Index funds are a category of mutual funds that track and replicate the performance of particular market indices like Nifty 50, or Sensex. They do this by replicating the securities of the particular index based on their respective weights. These funds do not try to beat the market unlike actively managed funds, rather, they seek to match the index’s performance, resulting in cost-effectiveness and broader market exposure for Investors.

Index funds have proved to be one of the most popular investment tools in India among investors who want to invest in the broader market but at low costs.

List of Top Index Funds in India

Best Index Funds in India in 2024

Note: These funds are listed based on their AUM and returns

Motilal Oswal Nasdaq 100 FOF Scheme

It is a fund-of-fund scheme with 99% holdings in Motilal Oswal NASDAQ 100 ETF. It tracks the NASDAQ 100 index, comprising 100 non-financial companies listed on the NASDAQ stock market, including leading technology companies like Amazon, Apple, and Mircosoft.

Although it carries a high-risk appetite, this scheme is suitable for investors who are seeking long-term wealth appreciation through foreign investments.

Bandhan Nifty 50 Index Fund

As the name suggests, this fund mirrors the performance of the Nifty 50 Index, which represents the performance of the top 50 companies in the Indian stock market. This index mainly consisting stocks of financial services(34%), IT(13%), and Oil gas (12%) companies.

The absence of entry and exit load is one of the significant benefits for investors in this fund.

This is a high-risk fund best suited for investors who are interested in investing in equity-related instruments that create wealth over a long time.

UTI Nifty 50 Index fund

This fund also tracks the performance of the benchmark index nifty 50 and It is a passively managed fund that aims to generate returns in line with the underlying index 

This fund suitable for the investors who are seeking Capital growth in tune with the index returns.

ICICI Prudential Nifty 50 Index Fund

This fund is managed by the fund house of ICICI which aims to generate revenue by investing in the stocks that are included in the nifty 50 index.

This is a highly risky fund and is suitable for investors who seek long-term wealth creation.

HDFC Index Fund Nifty 50 Plan

HDFC index fund nifty 50 falls under the large-cap category which has an objective of generating returns by investing in companies listed on the nifty 50 index. 

This is suitable for investors who are relatively new to equity investing and seek diversified exposure to large-cap companies in India.

SBI Nifty Index Fund

This fund is managed by the State Bank of India and categorized under the Large Cap Index category. This fund mirrors the performance of the Nifty 50 index and invests in these listed 50 companies to keep up with the returns of the index. This fund can be suitable for high-risk-taking equity investors.

Nippon India Index Nifty 50

Managed by Nippon India, it tracks the composition of the Index Nifty 50 and invests in those 50 companies to generate returns that correspond with the performance of the Nifty 50.

This fund is suitable for those investors who seek to invest in equity for the long term

HDFC BSE Sensex Plan

This is an open-ended scheme that invests by tracking the performance of the BSE SENSEX  which is one of India's well-known benchmark indices, comprising 30 of the largest and actively traded stocks on the Bombay Stock Exchange (BSE)

This is suitable for investors with a time horizon of 3 years and above.

UTI Nifty 200 Momentum 30 Index Fund

An open-ended scheme replicating/tracking the Nifty200 Momentum 30 Index. The Fund shall follow a passive strategy by investing in the constituents of the NIFTY 200 Momentum 30 Index, where the index construction is based on the "Momentum" within the Large & Midcap universe. A fund offering investors an opportunity to invest in a diversified portfolio of high-momentum companies that are expected to deliver higher returns over long long-term.

Motilal Oswal Nifty Midcap 150 Index Fund

The Scheme seeks to replicate the performance of nifty midcap 150 that mainly comprises sectors such as industrial products, Auto Components, Banks, Pharmaceuticals and biotech, and IT.

This is a high-risk scheme and suitable for investors seeking long-term wealth accumulation.

Also Read: ETF vs Index Fund

Benefits of Investing in Index Funds in India

Diversification:

Index funds invest in almost the same companies constituting a particular index, like the S&P 500. This diversification ensures reduced risk because the performance of the fund is spread across many stocks.

Lower Costs:

The expense ratio of an index fund is generally lower than that of actively managed funds because less research and management is involved since the fund simply mirrors the index.

Steady Performance:

Over time, most index funds have proved to be better than the average actively managed fund because they ride on the broad market rise.

Simplicity and Transparency:

Index funds are very simple and transparent in their objectives. It is easy for investors to know what they are getting into since their performance is pegged to that of an index.

Accessibility:

Most index funds have a low minimum investment requirement, hence penetrable to all categories of investors.

Passive Management:

Since index funds are passively managed, there is less frequent buying and selling of stocks involved. This reduces transaction costs and minimizes the impact of management fees.

Long-Term Growth:

Historically, the stock market indexes have risen over time. Taking investment in index funds allows investors to benefit from the upward trend of the market in due course of time.

Reduced Risk of Manager Underperformance:

Managers of active funds may not always succeed in beating the performance of the market. By investing in an index fund, an investor escapes the risk of performance associated with a single manager.

Broad Market Exposure:

Index funds provide the investor with wide exposure to industries and sectors, allowing him to ride the general performance of the market rather than taking any bets on particular sectors.

How to Invest in Index Funds in India

Step-by-step process on how to invest in index funds

Step 1. Set up your investment goals by determining your financial objectives and risk tolerance. 

Step 2. Choose an index fund by researching the various funds available, comparing expense ratios, and looking over their past performance. 

Step 3. Choose a brokerage firm, and open a Demat account with a good and reputable firm like Rupeezy.

Step 4. Fund your account and transfer money into it via a bank transfer,  or any other method provided.

Step 5. Buy the index fund by looking up the investment using its ticker symbol or name, then place a buy order for the amount you want to purchase.

Step 6. Monitor your investment by regularly checking its performance and rebalancing your portfolio if necessary. Stick with your plan, stay the course by avoiding emotional decisions, and make regular investments.

Conclusion

In this article, we have covered topics such as what is index funds, the List of Index funds, benefits, and how to invest in Index funds. Index funds are cost-effective, diversified, and simple ways to invest in order to replicate the market performance. Awareness of the advantages and adhering to any strategy in investing in these funds can help an investor leverage them to achieve their long-term financial goals. Be it a novice or experienced, some of the best index funds in India offer ample ways of creating wealth with less effort and reduced risk. Wrapping it up, Index funds are one of the best ways for investors to accumulate wealth while being in line with the index.