Mid cap index schemes with low tracking error, expense ratio (2024)

FAQs

Mid cap index schemes with low tracking error, expense ratio? ›

Navi Nifty Midcap 150 Index Fund, Tata Nifty Midcap 150 Momentum 50 Index Fund, and DSP Nifty Midcap 150 Quality 50 Index Fund had the lowest expense ratio ranging between 0.11% to 0.14%. while the other schemes in the list had an expense ratio of 0.20% and above. The tracking error ranged between 0.02 to 0.75.

In the midcap space, Navi Nifty Midcap 150 Index Fund has the lowest tracking error of 0.01%.

Fidelity ZERO Large Cap Index (FNILX)

Expense ratio: 0 percent. That means every $10,000 invested would cost $0 annually. Who is it good for?: Great for investors looking for a broadly diversified index fund at a low cost to serve as a core holding in their portfolio.

Tracking error measures the extent to which returns of an ETF have deviated from its underlying index. The lowest tracking error in the mid cap ETF category is 0.05% where as for sectoral ETFs it goes down to 0.02%.

The expense ratio ranged between 0.11% to 0.40% in the mid cap index category. Navi Nifty Midcap 150 Index Fund, Tata Nifty Midcap 150 Momentum 50 Index Fund, and DSP Nifty Midcap 150 Quality 50 Index Fund had the lowest expense ratio ranging between 0.11% to 0.14%.

While the two ETFs follow the same strategy, they earn different ratings. VOO earns a top rating of Gold, while SPY earns the next best rating of Silver. Almahasneh says the reason is fees and inefficiencies of the unit investment trust structure.

Our recommendation for the best overall S&P 500 index fund is the Fidelity 500 Index Fund. With a 0.015% expense ratio, it's the cheapest on our list. And it doesn't have a minimum initial investment requirement, sales loads or trading fees. Over the last 10 years, FXAIX has returned an annualized 12.02%.

Performance. Over the 10 years through June 2023, the exchange-traded share class has outperformed its average peer by 1.84 percentage points annualized, aided by a low cash drag and low fees. The fund's performance fluctuates with the mid-cap market, as it is always invested—unlike most of its active peers.

What is a tracking error on Fidelity? ›

Tracking error is the annualized standard deviation of daily return differences between the total return performance of the fund and the total return performance of its underlying index. In laymen's terms, tracking error basically looks at the volatility in the difference of performance between the fund and its index.

The acceptable level of tracking error is determined by each investor. Tracking error is neither good, nor bad. The performance of a portfolio with a 1.0 tracking error to its benchmark can be either higher or lower than the performance of the benchmark.

This fund scores Average because it delivered returns that were in the middle 35% when compared to other funds within its Morningstar category.

Bottom line. Mid-cap ETFs are an attractive way to invest in solid performers that have both growth and stability – and to do so without the risks of buying into individual stocks.

Most of the time, the tracking error of an index fund is small, perhaps only a few tenths of one percent. However, a variety of factors can sometimes conspire to open a gap of several percentage points between the index fund and its target index.

In an ideal case scenario, an index fund must have a tracking error of zero when comparing performance to its benchmark. But in reality, index funds lean towards the 1%, -2% range.

By providing diversified exposure across midcap companies, the Bandhan Nifty Midcap 150 Index Fund enables investors to tap into this growth potential and capitalise on emerging market trends.”

There are several indexes for tracking mid-cap stocks. The most widely referenced is the S&P Mid-Cap 400, but others include the Russell Midcap and Wilshire US Mid-Cap Index.