Index funds are funds that invest in an index. Their main objective is to replicate a stock market index in terms of the portfolio. An index fund has the same stocks and in the same weightage as the stocks listed on the chosen index.
Here are a few of the best index funds in India with the highest AUMs.
Disclaimer: This is for information purposes only. This is not a recommendation that highest AUMs should be considered before investing. Please consider your risk levels and goals before investing. The list was last updated on January 8.
In this article
List of Top Index Funds in India According to the Highest AUMs
UTI Nifty Index Fund is a mutual fund that is being managed by UTI Mutual Fund and is designed to imitate the Nifty 50 index. The fund was launched in March 2020. The fund manager of the fund is Sharwan Kumar Goyal who also manages other ETFs and Index Funds of UTI MF.
HDFC Index Fund is a mutual fund being managed by HDFC Mutual Fund and will follow the Nifty 50 index. The fund is being managed by Krishan Kumar Daga and Arun Agarwal. The fund was launched in July 2002. Both fund managers manage most other index funds, ETFs and arbitrage fund.
This fund is being managed by ICICI Prudential Mutual Fund and will mimic the Nifty 50 index. The fund manager for the scheme is Kayzad Eghlim who manages few other Sensex and Nifty index funds for the AMC. The fund is available since February 2002.
SBI Nifty Index Fund is being managed by SBI Mutual Fund and follows the performance of the Nifty 50 index. The fund manager for the scheme is Raviprakash Sharma. Mr Shamra manages another index ETFs, gold ETFs, gold funds among other funds he manages for the AMC. This scheme was launched in January 2002.
This fund is being managed by ICICI Prudential Mutual Fund and is designed to replicate the performance of the Nifty Next 50 Index. This index consists of 50 companies from the Nifty 100 Index after excluding the Nifty 50 companies. The fund manager for this fund is Kayzad Eghlim. The fund was launched in June 2010.
UTI Nifty Next 50 Index Fund is a mutual fund that is being managed by UTI Mutual Fund and is designed to imitate the Nifty 50 index. The fund was launched in June 2018. The fund manager of the fund is Sharwan Kumar Goyal.
The Motilal Oswal S&P 500 Index Fund is being managed by the Motilal Oswal AMC. This scheme is designed to map the U.S-based index S&P 500. S&P 500 Index has the top 500 companies of the U.S. Companies like Coca Cola, Apple, Facebook, Xerox, Google, Netflix, Microsoft, Disney, McDonald’s and many more are listed on the index. Hiren Visaria and Abhiroop Mukherjee are the fund managers of the scheme.
Axis Nifty 100 Index Fund is being run by Axis Mutual Fund and imitates the Nifty 100 index. The fund was launched in October 2010. The Nifty 100 index lists the top 100 companies by full market cap from the Nifty 500 index. Ashish Naik is managing this fund.
The Nifty Plan of Franklin India Index Fund was launched in August 2020. The fund managers for this scheme are Varun Sharma & Pyari Menon. The fund belongs to the Franklin Templeton Mutual Fund.
Nature of Index Funds:
Index funds are designed to imitate the performance of a chosen stock index. When I say imitating, I mean the holdings of the index and also the weightage of each stock. Even the best index funds have to follow this norm. So for example, a Nifty index Fund will invest 10% of its money in Reliance Industries if Nifty has given 10% of its weightage to RIL. Stock market indices also rejig their portfolio in a timely fashion throughout the year. Index funds have to abide by such changes. A fund manager of an index fund is supposed t keep track of any changes in the weightage or list of stocks.
Index Funds vs ETFs:
Some may get confused between index funds and ETFs. Many index funds and ETFs map various stock market indices. The key difference between the two is that ETFs are listed on the stock exchanges and traded on a daily basis during market hours. Index funds operate like regular mutual funds where often the day end’s NAV is charged.
Things To Look at Before Investing in Index Funds
Passive Management: Index funds are passive mutual funds. Passive mutual funds are those funds which do not have any active involvement of the fund manager. Like mentioned above, fund managers of index funds imitate the performance of an index. He/she cannot have a say in which stocks go in and out of the fund, how much of the fund’s money will be invested in which stock.
Returns: In index funds, fund managers do not look to beat the alpha, which in stock market lingo means to beat the benchmark. Here the fund manager tries to imitate it. So in most cases, the return is almost as much as the index returns or a little lower because of the charges of the fund. Hence, most of the top index funds in India will have returns almost similar to the benchmark index there are following.
Cost: Their expense ratio is generally lower than active funds.
Comparing Two Index Funds
Index funds can be benchmarked to different indices and not just the benchmark index: Sensex and Nifty 50. In fact, in the aforementioned list, you can see that there are index funds that are benchmarked to U.S. indices or broader ones like Nifty 100. When comparing two index funds, we can keep the following in mind:
- Index: Check the benchmark index and if it suits your investment needs.
- Cost: Expense ratio and other costs attached to the fund by the AMC becomes crucial in this case so one should also have a close look at those factors.
- Historical Data: Checking historical performance and if the index fund has been successful in aligning its portfolio to the benchmark index and if there were any repeated and reported discrepancies.
Index funds are passive mutual funds and aim to achieve wealth creation for investors by replicating an index’s performance. Index funds may be less risky as compared to active funds due to this reason. Such funds help balance out your portfolio across the risk parameter. Even though index funds map a particular index, one should not blindly invest in one of the best index funds. Do your due diligence in research and find out if these funds suit your portfolio and how much you should invest in them.
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