Best Nifty 50 Index Mutual Funds in India for Long-Term Investment (2024)

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A Nifty 50 index fund is an index mutual fund that invests in stocks of companies listed on the NSE’s Nifty 50 index. It aims to replicate the index’s performance through passive investment. The fund manager tracks the index and adjusts the fund’s holdings to match its composition.

This passive approach results in a lower total expense ratio than actively managed funds, making the Nifty 50 index fund a cost-effective investment. It offers returns that reflect the broader market. This article will explore a list of the top Nifty 50 index funds based on their 5-yr CAGR, fund overviews, and how to invest in Nifty 50 index funds in India.

Top 10 Nifty 50 Index Funds for 2024

Here is a list of the top 10 Nifty 50 Index Funds based on their 5-year CAGR:

Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.

• MF Universe: Funds Tracking Nifty
• Plan: Growth
• Category: Index Funds
• 5Y CAGR: Sorted from highest to lowest.

Note: The data on the Nifty 50 fund list is from 18th May, 2024. This data is derived from the Tickertape Mutual Funds Screener.

🚀 Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.

Top 10 Nifty 50 Index Funds: An Overview

Bandhan Nifty 50 Index Fund

Bandhan Nifty 50 Index Fund – Regular Plan has a current Net Asset Value (NAV) of Rs 50.22 for its Growth option. The fund’s 1-year return is 27.23%, and its 3-year CAGR is 15.41%. The fund manages assets worth Rs 1,219.39 cr with an expense ratio of 0.10%. There is no exit load for this fund. The minimum investment is Rs 1000, with additional investments starting at Rs 1000. For SIPs, the minimum investment is Rs 100.

UTI Nifty 50 Index Fund

UTI Nifty 50 Index Fund – Regular Plan has a current Net Asset Value (NAV) of Rs 159.52 for its Growth option. Its 1-year return is 27.17%, and 3-year CAGR is 15.32%. This fund manages assets worth Rs 16,924.52 cr and has an expense ratio of 0.18%. It does not have any exit load. The minimum investment required is Rs 5000, with additional investments starting at Rs 1000 and SIP investments at a minimum of Rs 500.

ICICI Pru Nifty 50 Index Fund

ICICI Prudential Nifty 50 Index Fund’s Growth option under the Regular plan has a net asset value (NAV) of Rs 233.84. Its 1-year return is 27.11%, and its 3-year CAGR is 15.29%. The fund manages assets worth Rs 8,941.14 cr. The minimum investment amount is Rs 100, and the same minimum applies to additional investments and SIPs.

Tata NIFTY 50 Index Fund

Tata Nifty 50 Index Fund has a current net asset value (NAV) of Rs 156.56 for its Growth option. Its 1-year return is 27.04%, and its 3-year CAGR is 15.29%. The fund manages assets worth Rs 717.24 cr with an expense ratio of 0.20%. An exit load of 0.25% applies if redeemed within 7 days. The minimum investment required is Rs 5000, with a minimum additional investment of Rs 1000. The minimum SIP investment is Rs 150.

Nippon India Index Fund-Nifty 50 Plan

Nippon India Index Fund – Nifty 50 Plan has a Net Asset Value (NAV) of Rs 39.47 for the growth option in its Regular plan. The 1-year return for this fund is 27.11% and its 3-year CAGR is 15.28%. It manages assets worth Rs 1,648.68 crore and has an expense ratio of 0.20%. There is an exit load of 0.25% if redeemed within 7 days. The minimum investment required is Rs 100, with the same minimum for additional and SIP investments.

HDFC Index Fund-NIFTY 50 Plan

HDFC Index Fund Nifty 50 Plan’s current net asset value (NAV) is Rs 220.41 for its Growth option under the Regular plan. The fund’s 1-year return is 27.13% and its 3-year CAGR is 15.28%. The fund holds assets under management (AUM) worth Rs 14,219.56 cr with an expense ratio of 0.20%. There’s an exit load of 0.25% if redeemed within 3 days. Minimum investments include Rs 100, with additional investments and SIP starting at the same amount.

DSP NIFTY 50 Index Fund

DSP Nifty Next 50 Index Fund is an equity mutual fund from DSP Mutual Fund, managed by Anil Ghelani and Diipesh Shah. With an AUM of ₹520.26 cr, the latest NAV is ₹28.021. Over the past year, this fund has delivered a return of 27.17%. The minimum SIP investment is ₹100. The fund’s 3-year CAGR is 15.30%, the expense ratio is 0.18%, and PE ratio is 31.54.

SBI Nifty Index Fund

SBI Nifty Index Fund is an equity mutual fund from SBI Mutual Fund, managed by Raviprakash Sharma. It has an AUM of ₹7,431.36 cr and an NAV of ₹215.505. Over the past year, this fund has returned 25.89%. The minimum SIP investment amount is ₹500. The fund’s 3-year CAGR is 15.39%, the expense ratio is 0.20%, and the PE ratio is 31.54.

Aditya Birla SL Nifty 50 Index Fund

Aditya Birla Sun Life Nifty 50 Index Fund is an equity mutual fund from Aditya Birla Sun Life Mutual Fund. Managed by Pranav Gupta and Haresh Mehta, the fund has an AUM of ₹846.19 cr, with a current NAV of ₹240.400. Over the past year, the fund has delivered a return of 25.88%. Investors can start a SIP in this scheme with a minimum amount of ₹100. The fund’s three-year CAGR is 15.29%, the expense ratio is 0.20%, and the PE ratio is 31.54.

LIC MF Nifty 50 Index Fund

LIC MF Nifty 50 Index Fund Direct-Growth is an equity mutual fund from LIC Mutual Fund. Managed by Sumit Bhatnagar, the fund has an AUM of ₹296.05 cr and an NAV of ₹138.602. Over the past year, it returned 25.70%. The minimum SIP investment is ₹1000. The fund’s three-year CAGR is 15.32%, the expense ratio is 0.20%, the PE ratio is 31.54.

How to Invest in Nifty 50 Index Funds?

Investing in Nifty 50 Index Funds is a straightforward process. Here are some steps that might be helpful.

Investing in a Nifty 50 Index Fund through an AMC’s website involves the following steps:

1. Visit the official website of the AMC.
2. Fill in the necessary information.
3. Complete the e-KYC process by providing Aadhaar and PAN card details.

For those opting to invest through mobile apps, the process is as follows:

1. Download the relevant mobile app, like the smallcase app, for instance.
2. Register by providing the required contact information.
3. Complete the e-KYC procedure.

Upon successful verification, individuals can initiate investments in various Nifty 50 Index Funds available in India through different mobile apps. Despite the streamlined process, it’s essential to consult a financial advisor and conduct thorough research before investing.

What are Index Funds?

An index fund is a mutual fund that passively tracks a specific market index, such as the Nifty 50 or Sensex. Instead of actively selecting individual stocks, index funds hold all the stocks in the index in the same proportion. This strategy aims to replicate the performance of the chosen index. In contrast, actively managing mutual funds involves a fund manager deciding which stocks to buy and sell, aiming to outperform the market through strategic buying and selling.

What is a Nifty 50 Index Fund?

Nifty 50 Index Funds are investment funds that aim to replicate the performance of the Nifty 50 index, a benchmark index comprising 50 large, actively traded stocks on the National Stock Exchange of India (NSE).

The best Nifty 50 index funds passively track the Nifty 50 index, seeking to mirror its returns. They can expose investors to a diversified portfolio of leading companies across various sectors. Nifty 50 Index Funds can be designed to offer a convenient and cost-effective way for investors to participate in the potential growth in the Indian stock market without the need to manage individual stocks actively.

How do Nifty 50 Index Funds Work?

When you invest in an index fund, the fund manager allocates your money to stocks in the same ratio as the tracked index. For example, Reliance Industries has a 10.408 % weightage in the NIFTY 50; the NIFTY Index Fund’s manager might consider this when constructing a portfolio. Likewise, stocks of other companies are held in proportional alignment with the index.

If a stock’s weightage has increased or decreased in the index, the Index Fund manager adjusts the fund accordingly. When a stock is excluded and replaced, the fund manager sells the removed stock and acquires the new stock. Thus, it maintains proportional alignment with the index.

Key Features of the Best Nifty 50 Index Funds

Here are some of the key features of Nifty mutual funds, from a passive investment approach for simplicity to diversified portfolios.

• Passive Investment Approach: Investors may appreciate the passive investment strategy of Nifty 50 Index Funds. These funds aim to replicate the Nifty 50 index, allowing them to participate in the market without needing active stock selection.
• Diversification: Nifty funds can offer strong diversification, spreading investments across 50 large-cap stocks from various sectors. This can be beneficial for risk-conscious investors who seek a well-rounded portfolio.
• Market Representation: Investors can gain exposure to the broader Indian equity market through Nifty 50 Index Funds, potentially gaining insights into the overall economic landscape.
• Liquidity: Including highly liquid stocks in the Nifty 50 index suggests Nifty 50 Index Funds. This may provide investors with liquidity benefits.
• Benchmark Performance: Investors can use the Nifty 50 index as a benchmark to assess the fund’s performance. It may provide a transparent and straightforward way to evaluate their investment.
• Low Portfolio Turnover: These funds may have lower portfolio turnover due to their passive nature. This characteristic might reduce transaction costs and potential tax efficiency for investors.

Before making investment decisions, individuals may find it helpful to review the specific features of individual funds, such as expense ratios, tracking errors, and historical performance. However, it is always worthwhile to consult a professional before investing.

Advantages of Investing in the Best Nifty50 Index Funds

Let’s look at the advantages of investing in Best Nifty50 Index Funds.

• Absence of Fund Manager Bias: The fund manager’s role is solely to replicate the tracked index. For instance, an Index Fund mirroring the Nifty Next 50 Index exclusively invests in the 50 stocks comprising that index. With no need for personal stock selection or timing market entry and exit, the risk of personal bias is nullified.
• Cost-Effective Investment: Even for the best Nifty Fifty index fund, a team of analysts isn’t required for extensive research or the timing of market trends for individual stock entries and exits. Consequently, the cost of managing an Index Fund is notably lower compared to actively managed Equity Mutual Funds.
• Diversified Portfolio: Indices typically represent diversified baskets of stocks across various sectors, with limitations on individual stock exposure. As Index Mutual Funds can replicate the chosen index, investors benefit from diversified portfolios by minimising risk. Achieving such a high degree of diversification at a low cost can be often challenging for actively managed funds.

What is the Composition of the Nifty 50 Index?

The Nifty fifty index funds are computed using the free float market capitalisation method. This means that the weight of each stock in the index is proportional to its free float market capitalisation.

The table below represents the top Nifty 50 index sectors and their respective weightage:

Who can Invest in Nifty 50 Funds?

Nifty 50 funds can be a good investment option for a broad spectrum of investors, including individuals, institutional investors, and even foreign investors. These funds are accessible to anyone interested in gaining exposure to the Nifty 50 index funds and participating in the performance of the 50 large-cap stocks represented in the index. Investors with varying risk appetites and investment horizons may consider including the best Nifty index fund in their portfolios based on their financial goals and preferences.

Taxation on Nifty 50 Mutual Funds as per the Union Budget of 2024-25

The tax on returns from index funds depends on your income tax slab and the duration for which you hold the investment. Index funds mirror the performance of a market index, providing returns close to the index’s performance. Investors who seek predictable returns often choose these funds. Here’s a breakdown of the capital gains tax levied on the gains from your index fund investments based on the revisions made in the Union Budget 2024:

Equity Index Funds

• Short-Term Capital Gains (STCG): The gains from units held for less than a period of 12 months are taxed at 20%.
• Long-Term Capital Gains (LTCG): The gains from units held for over a period of 12 months are now taxed at 12.5%. However, gains up to Rs. 1 lakh are tax-free. Indexation benefits were withdrawn during the Union Budget of 2024-25.

Debt Index Funds

• Short-Term Capital Gains (STCG): The gains from units held for less than 36 months are taxed according to your income tax slab rate.
• Long-Term Capital Gains (LTCG): The gains for mutual funds held over 36 months are called long-term capital gains. For investments made after April 1, 2023, gains are taxed as STCG at your income tax slab rate, with no indexation benefit. Investments made before this date enjoy the old LTCG rate of 20% with indexation benefits.

Mutual fund schemes where neither the equity nor debt orientation exceeds 65% will now be classified as long-term investments after 24 months. The previous holding period for these funds was 36 months. These will be taxed at the revised LTCG tax rate of 12.5%.

Risks Associated with Investing in the Best Nifty 50 Index Funds

Here are some of the risks associated with Nifty 50 index funds – direct growth.

• Market Volatility: Investments in even the best Nifty 50 index fund can be susceptible to market fluctuations. Thus, the fund’s value may vary based on the index’s performance.
• Economic Factors: The fund’s returns may be influenced by broader economic conditions, including inflation rates, interest rates, and overall economic stability.
• Tracking Error: While designed to mimic the Nifty 50 index, the fund may experience tracking errors, which lead to deviations in performance compared to the index.
• Single Index Exposure: Since the fund closely follows the Nifty 50 index, its performance is directly tied to the companies within that index, lacking diversification beyond these 50 stocks.
• Market Risks: Changes in market sentiment, geopolitical events, or unforeseen crisis can impact the fund’s performance.
• Liquidity Risks: The liquidity of the underlying assets in the Nifty 50 index may affect the fund’s ability to buy or sell securities and potentially impact returns.
• Regulatory Changes: Alterations in regulatory policies can affect the Nifty 50 index or equity markets. In general, it could impact the fund’s performance and investor returns.
• Long-Term Commitment: Similar to equity investment, investing in the Best Nifty 50 Index Fund requires a long-term commitment. The short-term market fluctuations may not align with immediate investor goals.

Factors to Consider When Investing in Nifty 50 Index Funds

Consider the following factors when assessing Nifty 50 index funds:

• Performance History: Evaluate the fund’s performance over different market conditions and time periods, comparing it with the Nifty 50 index. Consistent performance indicates effective index tracking.
• Return Potential: While these funds aim to mirror the Nifty 50 index, actual returns may vary due to tracking discrepancies and fees. Compare historical returns with the benchmark to gauge performance.
• Fund Management Expertise: Despite being passively managed, fund managers’ experience is crucial. Assess their track record to ensure they can effectively manage the fund and minimise tracking errors.

These considerations help investors make informed decisions when investing in Nifty 50 index funds.

To Wrap It Up…

In conclusion, investing in the top Nifty 50 index fund can be a good investment option, especially for investors aiming to capitalise on the growth potential of India’s leading 50 companies. The best Nifty index funds can provide an economical, diversified, and user-friendly avenue to tap into the performance of India’s largest corporations. As always, investors must research and consult their financial advisors before investing.

Frequently Asked Questions About Nifty 50 Index Funds