Nifty 50 Index Fund

With Nifty 50 Index Fund, your money is invested in India’s largest 50 stocks under the Nifty 50 Index of the National Stock Exchange. As an investor, you get to invest in the country's top companies across diversified sectors for long-term and stable growth and returns.

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An annualised return of approximately 20%

An annualised return of approximately 20%

Long-term growth opportunity

Long-term growth opportunity

Low cost involved

Low cost involved

A proven strategy for superior returns

A proven strategy for superior returns

What are Nifty 50 Index Mutual Fund?

A Nifty 50 scheme is an index mutual fund, which invests in the stocks of companies listed on NSE’s flagship index, the Nifty 50.  Referred to as a Nifty 50 index fund, its goal is to mirror the performance of Nifty 50 through passive investment. The fund manager monitors the index and adjusts the fund's holdings by the index composition.

Due to its passive approach, the total expense ratio for managing index funds is lower than actively managed funds. Consequently, the Nifty index fund serves as a cost-effective investment choice, offering returns aligned with the broader market. Index funds have a long history of delivering superior returns than most active funds over long time horizons. 

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Advantages of investing in Nifty 50 Index Fund

Investing in the best Nifty 50 index fund will provide you with several benefits that you must be aware of. Read the pointers below to know them before you start your investment journey:

  • Low Cost

    The cost that you need to bear for investing your money in Nifty 50 index funds is very low. Since the fund managers do not require any analysts or researchers to make decisions regarding the purchase or selling of stocks, no additional cost is necessary. This is why index funds charge some of the lowest expenses among mutual funds. 

  • Diversified Portfolio

    Nifty 50 index funds invest in the top 50 companies in India. This means your money is invested across diversified sectors and companies, helping you to get exposure to many successful businesses. It also helps in reducing the risk involved in your portfolio, making it suitable for first-time investors.

  • Low Risk

    Nifty index funds intrinsically carry lower risk than actively managed products. These funds imitate the performance of the Nifty 50 index, which includes 50 well-known and reliable corporations from a variety of industries. The index's diversification serves to disperse risk, mitigating the impact of bad individual stock performance.

  • Easy to Invest

    Investing in Nifty 50 index fund is simple and reliable, making it an appealing alternative for both new and experienced investors. These funds may be purchased and sold using a variety of financial channels, making them easily accessible. The investing process's simplicity reduces the need for regular monitoring, making it an attractive option for people looking for a hassle-free investment.

  • Transparency

    The Nifty index funds offer transparency in their investment technique. Because these funds seek to mirror the Nifty 50 index, investors may readily monitor and comprehend the underlying assets. Regular updates on the index's composition and fund holdings are accessible, allowing investors to make educated selections based on real-time data.

  • Unbiased Investment

    These funds provide an unbiased investment approach by eliminating the influence of individual fund managers' decisions. The fund's performance is directly linked to the Nifty 50 index, avoiding any subjective biases that might affect actively managed funds. This ensures that investment decisions are driven by the overall market rather than individual opinions or strategies.

Popular Nifty 50 Index Funds

UTI Nifty Index Fund

UTI Nifty Index Fund is one of the most established Nifty 50 index funds in India, known for its consistent performance in tracking the Nifty 50 index. It aims to replicate the index by investing in the same stocks in identical proportions, providing investors with returns that closely mirror the index. With a low expense ratio typically around 0.1% to 0.2%, it is an attractive option for cost-conscious investors looking for a simple and effective way to gain exposure to the Indian equity market.

HDFC Index Fund - Nifty 50 Plan

HDFC Index Fund - Nifty 50 Plan is designed to offer returns that align with the performance of the Nifty 50 index. Managed by HDFC Mutual Fund, this fund invests in the constituent stocks of the Nifty 50 in the same weightage. Known for its low expense ratio, generally ranging from 0.1% to 0.3%, and its reliability in tracking the index, this fund is a popular choice among investors seeking a hassle-free investment that delivers returns comparable to the top 50 companies in India.

ICICI Prudential Nifty Index Fund

The ICICI Prudential Nifty Index Fund is managed by ICICI Prudential Mutual Fund and aims to mirror the performance of the Nifty 50 index. This fund invests in the same stocks as the Nifty 50, maintaining the same proportions to ensure that its returns are closely aligned with the index. With an expense ratio usually between 0.1% and 0.3%, it offers investors a cost-effective way to invest in a diversified portfolio of large-cap Indian stocks.

SBI Nifty Index Fund

SBI Nifty Index Fund seeks to replicate the Nifty 50 index by investing in its constituent stocks, aiming to provide returns that are in close correspondence with the index. Managed by SBI Mutual Fund, it is known for its low expense ratio, typically around 0.1% to 0.3%, and its efficiency in tracking the Nifty 50. This fund is a preferred choice for investors looking for a straightforward investment that offers broad market exposure to India's leading companies.

Aditya Birla Sun Life Nifty 50 Index Fund

Aditya Birla Sun Life Nifty 50 Index Fund aims to mirror the Nifty 50 index by investing in the same stocks and maintaining similar weightage as the index. This fund is known for its effective tracking and delivering returns that closely match the performance of the Nifty 50. With a low expense ratio, usually around 0.1% to 0.3%, it provides a cost-effective way for investors to diversify their portfolios with investments in India's top 50 companies, making it a popular choice among index fund investors.

 

 

Who should consider investing in Nifty 50 Index Fund?

Before you start your journey with Nifty 50 index funds, you need to have an idea for which investors this mutual fund is suitable. To know more about it in detail, keep reading below.

  • First Time Investors

    The Nifty 50 index funds are great for first-time investors due to their simplicity. These funds mirror the performance of the Nifty 50 index, which includes the top 50 businesses on the National Stock Exchange (NSE). This gives investors broad market exposure without requiring the hassles of research and stock selection. 

  • Investors with a Low-Risk Appetite

    The Nifty 50 index consists of established and well-performing corporations, which reduces the risk involved with individual stock selection. Investors with a cautious attitude or a low-risk tolerance will find these schemes appealing since they provide consistency and historically consistent performance.

  • Long Term Investors

    Nifty 50 index funds are ideal for long-term investors. These funds have demonstrated reliability and continuous growth over a long time, in line with the overall good trend of the Indian economy. Long-term investments in these funds can take advantage of compounding.

  • Investors Seeking Liquidity

    Nifty 50 index funds often have strong liquidity since their underlying assets are regularly traded on the stock exchange. This makes it ideal for investors who want to enter and exit their investments at any time. 

  • Investors Seeking Low Costs

    As an index fund, it will have lower cost ratios than actively managed funds. This benefits cost-conscious investors since it reduces the impact of the fund's expense ratio on returns. Lower expenditures lead to higher overall profits, particularly over the long run.

  • Investors Wanting to Diversify

    Investing in Nifty 50 index funds provides rapid diversification because the index contains firms from numerous industries. This diversity reduces the risk associated with the performance of specific stocks or sectors, making it an appealing option for investors looking for a well-rounded portfolio.

Points to consider before investing in Nifty 50 Index Fund

There are a few things that you must consider before you put your money in a Nifty 50 mutual fund. Below are the points mentioned in detail.

  • Performance of the Fund

    Before investing in Nifty 50 index funds, you should consider the fund's past performance. Examine how the fund has done over different periods, particularly under diverse market circumstances and compare it with the benchmark. Consistency in performance might reflect how well the fund tracks the Nifty 50 index.

  • Return on Your Investment

    Understanding possible return on investment is critical. While Nifty 50 index funds seek to replicate the performance of the Nifty 50 index, actual returns may differ owing to tracking errors and fund fees. To determine the fund's performance, compare its historical returns to those of its benchmark.

  • Expertise of Fund Managers

    Even though Nifty 50 index funds passively monitor the Nifty 50 index, the experience of fund managers is still important in managing the fund effectively. Examine the fund management team's experience and track record to verify they have the necessary competence to properly administer the fund and reduce tracking errors as much as possible.

Limitations of investing in Nifty 50 Index Fund

Even though you know about the advantages of Nifty 50 index funds, it is important to know some of its limitations as well, to make informed financial decisions. Some of these limitations are:

  • No Control by Investors

    With these funds, investors have no say over the index's composition. They must accept the predetermined basket of equities in the Nifty 50, regardless of personal preferences or market circumstances. This lack of control may be detrimental during times of market volatility since investors are unable to actively modify their holdings.

  • Inflexible Structure

    Nifty 50 index funds are limited to the index's predefined selection of 50 stocks. This narrow universe may not reflect shifting market dynamics or emerging economic trends. Investors looking for exposure to certain sectors or developing businesses may find the structure of Nifty 50 index funds restrictive.

  • Tracking Errors

    Despite the intention to duplicate the Nifty 50 performance, tracking mistakes are inevitable owing to factors including transaction costs, management fees, and dividend reinvestment. These inaccuracies can cause differences in returns between the fund and the actual index.

How to start investing in Nifty 50 Index Fund with INDmoney?

After you have understood what nifty 50 mutual funds are, it is time for you to start your investment process with INDmoney. Below are some simple steps to follow to start your mutual fund's investment journey with us.

  • Step 1

    Download the INDmoney app and create your free investment account by   completing your KYC ( Know Your Customer).

  • Step 2

    Once your Free investment account is ready, you can either search for a nifty 50 mutual fund or go to the mutual fund section and tap on nifty 50 mutual funds in Index Fund Catalog.

  • Step 3

    Choose a nifty 50 mutual fund by looking at aspects like past returns, volatility, downside capture ratio, AUM, Expense ratios and underlying stocks and sectors.

  • Step 4

    You can choose to set up SIP in nifty 50 mutual funds or even invest as lumpSum. Once you are on the individual nifty 50 mutual Fund page click from the bottom “One-time” for lump sum investment or “SIP” for systematic investment plan.

  • Step 5

    Choose the amount that you want to invest as SIP or LumpSum.

  • Step 6

    Set up payments. If you choose to set up SIP in nifty 50 mutual funds,  you can do a free automatic pay set up via bank mandate or UPI. If you choose to invest in lumpsum (one-time) then you can pay via UPI, netbanking, NEFT or RTGS.

Should you invest in Nifty 50 Index Fund?

If you are seeking to invest in stocks of reputable companies, with moderate return and low risk exposure, then Nifty 50 index funds can be feasible. Index funds offer the benefit of low expenses, simplicity and a proven track record. However, active funds offer the potential to generate market-beating returns. With different advantages and factors to consider in this fund, make sure to analyse the funds appropriately and assess your financial goals and risk appetite before investing.

Frequently Asked Questions

Nifty 50 index fund is a passive investment vehicle intended to mimic the Nifty 50 index. This consists of the top 50 Indian firms based on market capitalisation. Those who purchase this fund are exposed to a mini-portfolio of diverse blue-chip equities, with weightage corresponding to the relative value of the firms in the index.

There are several reasons why investing in a Nifty 50 index fund is appealing. The initial reason is that these funds are less expensive than actively managed funds. This improves returns on a long-term basis. Another big benefit is its simplicity and the proven track record of the Nifty 50 index. 

Nifty 50 index funds have risks associated with them even if they provide significant perks and benefits. Fund value might fluctuate short term due to market volatility, which affects the index as well as the larger market. 

The optimal investment amount in a Nifty 50 index fund depends on your risk tolerance, followed by the total mix of portfolio, and personal objectives. It is advised to seek out individualised guidance depending on these variables. The parameter of index funds may often be used as a foundational holding in a portfolio of a diversified nature. 

Investing in a Nifty 50 index fund via an SIP provides investors with a methodical as well as disciplined approach without any kind of doubt. Investors may incorporate predetermined contributions regularly, or usually every month with SIPs. 

A comprehensive examination of several aspects is necessary when comparing different funds of the Nifty 50 index. The expense ratio is something that investors should focus on taking into account with lower values being quite further economical. Another important metric is the tracking error, which indicates how well the fund mimics its benchmark index. 

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