Index Funds

Index funds are a low-cost way to invest in a diversified portfolio of stocks that track the performance of a specific market index, such as the Nifty 50 or Sensex. By investing in an index fund, investors can gain exposure to the overall market without having to buy individual stocks themselves.
Know more about Index Funds

Sort

Index Funds Calculator

Calculate your interest returns for investment with INDmoney
  • SIP

  • One-Time

Select Frequency

Investment Amount

₹

Disclaimer : Projections/estimations is backtested using historical data

Insights on Best Index Funds

Top Nifty Index Funds by Net Inflow

  • UTI Nifty 50 Index Fund-Growth Option- Direct has seen net inflow of ₹2617.2 Cr in the last 6 months in the nifty index funds category
  • HDFC Index Fund Nifty 50 Plan-Direct Plan has seen net inflow of ₹1988.9 Cr in the last 6 months in the nifty index funds category
  • SBI Nifty Index Fund Direct Growth has seen net inflow of ₹1589.0 Cr in the last 6 months in the nifty index funds category

Top Holdings of Nifty Index Funds

  • Axis Bank Ltd is held by 39 out of 71 mutual funds in the nifty index funds category, with a total investment value of ₹1618.75Cr
  • HCL Technologies Ltd is held by 36 out of 71 mutual funds in the nifty index funds category, with a total investment value of ₹721.85Cr
  • Infosys Ltd is held by 36 out of 71 mutual funds in the nifty index funds category, with a total investment value of ₹2854.89Cr

Top New Holdings Added by Nifty Index Funds

  • In the last 6 months, Jio Financial Services Ltd stock has been added by 2 out of 71 mutual funds in the nifty index funds category, with a total investment value of ₹4.51Cr
  • In the last 6 months, Jindal Steel & Power Ltd stock has been added by 1 out of 71 mutual funds in the nifty index funds category, with a total investment value of ₹7.53Cr
  • In the last 6 months, LTIMindtree Ltd stock has been added by 1 out of 71 mutual funds in the nifty index funds category, with a total investment value of ₹2.99Cr

Top Holdings where Nifty Index Funds increased investment

  • In the last 6 Months, Tata Consultancy Services Ltd stock has been added by 5 out of 71 mutual funds in the nifty index funds category, with a total investment value of ₹55.75Cr
  • In the last 6 Months, Asian Paints Ltd stock has been added by 4 out of 71 mutual funds in the nifty index funds category, with a total investment value of ₹28.55Cr
  • In the last 6 Months, Hindustan Unilever Ltd stock has been added by 4 out of 71 mutual funds in the nifty index funds category, with a total investment value of ₹2.64Cr
 

What are Index Funds?

Index funds are a type of mutual fund that allows investors to passively invest in the stock market by tracking a particular market index. They invest in the same proportion of stocks as the underlying index, and are therefore able to offer potentially higher returns due to their lower fees. In essence, index funds are a low-cost and convenient way for investors to gain exposure to the overall stock market.

Advantages of investing in best index mutual funds

Investing in the best index mutual funds can be a smart and cost-effective way to build a diversified investment portfolio. It eliminates the need for active management, reduces costs, and provides exposure to a broad segment of the market while eliminating human bias.
Passive Investment Strategy image

Passive Investment Strategy

Index funds are passively managed, which means they track an underlying index and dont try to outperform it. This makes them ideal for most investors who want a hassle-free investment option.
Lower Costs image

Lower Costs

Index mutual funds have a lower expense ratio compared to actively managed funds because they dont require active trading or research teams. This means more returns for investors in the long term.
Elimination of Human Bias image

Elimination of Human Bias

In an index fund, the fund manager follows the benchmark index, and thus human discretion in investment decisions is eliminated. Humans can make errors in judgement. On the other hand, index is free from human biases, follows an automated approach, and does not require consistent tracking.
Diversification image

Diversification

Index funds provide exposure to a broad segment of the market, covering key sectors of the economy. This allows investors to diversify their portfolios and reduce risk.

Things to consider before investing in the best index funds 2023

investing in the best index funds can be a smart choice for investors looking for a diversified and cost-efficient investment option. However, its important to consider risk management, performance potential, and investment horizon before making an investment decision.
Cost Efficiency image

Cost Efficiency

Consider the expense ratio of the fund as a crucial factor when selecting an index fund. Lower expense ratios mean higher returns.
Risk Management image

Risk Management

While index funds provide attractive returns, they are not immune to market risks. Hence, diversify your portfolio with a mix of active and index funds to mitigate risks.
Performance Potential image

Performance Potential

Check the tracking error of the index fund, which indicates the deviation of the funds returns from the indexs returns. Lower tracking error means better fund performance.
Investment Horizon image

Investment Horizon

Index funds are well-suited for long-term investors, as they provide consistent returns over time.
Financial Goals image

Financial Goals

Every investor has a financial goal to fulfill. Index funds are best suited for individuals planning for retirement or wealth creation for a long-term goal like child education or marriage.

How to start investing online in the best index funds?

img
STEP 1
Download the INDmoney App
img
STEP 2
Create your profile
img
STEP 3
Select any best index fund from our catalogue
img
STEP 4
Choose between Starting a SIP or One time lumpsum
img
STEP 5
Complete the payment process

Types of Best Index Funds

There are various types of Index funds that are tracking the Nifty 50 Index, Nifty Mid Cap, Sensex, Nifty Small Cap, and Global indices. Mutual Fund companies such as SBI Mutual Funds, HDFC Mutual Funds, and ICICI Prudential Mutual Fund along with 30 others have more than 70+ Index Funds active in India.
There are 2 types of Index Fund plans: Direct index funds plan and Regular index funds plan. Direct index funds typically have lower expense ratios compared to regular index funds as there is no need for a fund manager to manage the portfolio

Why Should you invest in Index Funds?

If you are considering investing in the Indian stock market, index funds are an investment option you should definitely consider. Not only do they offer instant diversification, but they are also low-cost and offer long-term growth potential. In this article, well explore who should invest in index funds in India and why.
Firstly, index funds are an excellent investment option for new investors who are just starting out. By investing in an index fund, you gain exposure to a broad range of stocks without having to worry about picking individual stocks or keeping track of market fluctuations. This makes index funds a great way to start investing without needing a lot of knowledge or experience.
Secondly, index funds are an excellent investment option for long-term investors who are looking to build wealth over time. While index funds may not provide the same level of potential returns as individual stocks, they are a more stable and reliable investment option. Over the long term, index funds have historically provided solid returns that have outperformed many actively managed funds.
Thirdly, index funds are an excellent investment option for investors who are looking for low-cost investment options. Index funds typically have lower expense ratios compared to actively managed funds, which means that investors can keep more of their investment returns. This makes index funds an attractive option for investors who are looking to build a diversified portfolio while keeping costs low.

Taxation on Index Funds:

When investing in equity or debt index funds, its important to understand the tax implications on the capital gains earned upon redemption of your units.
For equity index funds, the rate of tax depends on the holding period. If you hold the units for up to one year, any capital gains earned will be considered Short Term Capital Gain (STCG) and will be taxed at a rate of 15%. If you hold the units for more than one year, any capital gains earned will be considered Long Term Capital Gain (LTCG). However, LTCG up to Rs. 1 lakh is not taxable, while any LTCG above this amount is taxed at a rate of 10% without any indexation benefits.
Similarly, for debt index funds, the tax treatment is also dependent on the holding period. If you hold the units for up to three years, any capital gains earned will be considered Short Term Capital Gain (STCG) and will be added to your taxable income and taxed at your applicable tax slab rate. If you hold the units for more than three years, any capital gains earned will be considered Long Term Capital Gain (LTCG) and will be taxed at a rate of 20% with the benefit of indexation.

Most Popular Comparisons

    • HDFC Index S&P Fund Sensex Plan-Direct Plan
      HDFC Index S&P Fund Sensex Plan-Direct Plan
      Vs
    • UTI Nifty Next 50 Index Fund Direct Growth
      UTI Nifty Next 50 Index Fund Direct Growth
    Compare
    • ICICI Prudential S&P BSE Sensex Index Fund Direct Growth
      ICICI Prudential S&P BSE Sensex Index Fund Direct Growth
      Vs
    • Axis Nifty 100 Index Fund Direct Growth
      Axis Nifty 100 Index Fund Direct Growth
    Compare
    • Nippon India Index S&P BSE Fund Sensex Plan - Direct Plan - Growth Plan
      Nippon India Index S&P BSE Fund Sensex Plan - Direct Plan - Growth Plan
      Vs
    • PGIM India Large Cap Fund Direct Plan Growth
      PGIM India Large Cap Fund Direct Plan Growth
    Compare
    • DSP Nifty Next 50 Index Fund Direct Growth
      DSP Nifty Next 50 Index Fund Direct Growth
      Vs
    • Nippon India Nifty Next 50 Junior BeES FoF Direct Growth
      Nippon India Nifty Next 50 Junior BeES FoF Direct Growth
    Compare

Limitations of Index Funds

  • Limited flexibility: Index funds track a specific market index. This limits their ability to generate alpha or outperforming the market.
  • No downside protection: Index funds provide no protection against market downturns or declines in individual stocks within these funds.
  • Limited diversification: Index funds invest in a limited number of stocks that are present in the relevant index. This results in reduced diversification benefits.
  • Low dividend yield: Index funds may have a low dividend yield compared to actively managed funds.
  • Limited exposure: Index funds may not invest in all sectors or industries, limiting exposure to certain segments of the market. This is because its mandate is to invest in a certain specific index.

Frequently Asked Questions

What are index funds?

How to invest in index funds online?

How are index funds in India taxed?

Can index mutual funds pay dividends?

How to choose the correct index funds to invest in?

What are the risks involved in investing in index funds?

How long should I remain invested in index funds?

Where do index mutual funds invest?

How much money should I invest in index funds?

What are the expected returns of index funds in India?

Show all FAQs