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Top Nifty Index funds to Invest in 2022

  • Akshatha Sajumon
  • Feb 13 2022
  • 8 minutes
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Nifty Index Funds are index funds that primarily invest in stocks that form part of the Nifty index. These are passively managed funds. The investment in stocks is also made in the same proportion as in the index. These funds do not aim to beat the indices like Nifty 50 or Sensex but to mirror the index performance. 

Index funds are increasingly preferred by many investors because of the low management fees, as these do not require fund managers to design strategies on stock selection.

Here, we will learn some basics of index funds and also some top-performing Nifty index funds to invest in.

What are Index Funds?

An index fund is a type of mutual fund in which the portfolio is constructed to match the components of a market index, such as the Nifty 50. An index fund provides broader market exposure, has low operating expenses, and also minimal portfolio turnover. 

Index funds adopt a passive investment strategy as they seek to match the risk and return profile of the market. The theory that index funds follow in the long-term is that the market will outperform any individual stock investment.

What are the benefits of investing in Nifty Index Funds?

Here are some benefits offered by Nifty Index fund investments:

  1. Index funds follow passive investment strategy and therefore replicate the index constituents. This way, the portfolio mix is simple and also easier to monitor as compared to individual stock investments.
  2. These involve far lesser cost as compared to other mutual funds since there is no need for active management around stock-selection strategies.
  3. Nifty index funds have historically generated healthy returns in the long term. The NSE Nifty index base year is 1995 and has seen 11-fold returns in the past 23 years. This means an index fund following Nifty would have made similar returns in those years. 
  4. The Nifty is well tracked and offers a macro view that is based on historical data. This is much easier to follow as compared to specific stock performance. 
  5. Index funds may also overcome the selection bias, since the portfolio composition is not at the discretion of fund managers. Since index funds are passive funds, these just track the index. 

 

Top Nifty Index Funds to invest in 2022

Mentioned below are some top Nifty index funds in India:

L&T Nifty 50 Index Fund – Growth – Direct Plan

About the fund

L&T Nifty 50 Index Fund belongs to L&T Mutual Fund umbrella. This scheme was launched on 15-Apr-2020. It adopts a passive investment strategy and invests in stocks that comprise the Nifty 50 index. 

Inception Date April 15, 2020
Benchmark Name Nifty 50
Fund Manager Praveen Ayathan
Objective The primary objective is to achieve returns in tandem to the Total Returns Index of Nifty 50 index. The scheme aims to minimise performance difference between its returns and the benchmark index.

 

Sector Allocation

Here is a table of the fund’s top percentage allocation of investment across sectors:

Sectors Percentage Allocation
Financial  38.8%
Technology 16.4%
Energy 14.6%
Consumer Goods 8.4%
Others 16.5%

UTI Nifty Index Fund – Growth

About the fund

This fund is ideal for those investors who are looking for capital growth in line with the index returns. The fund follows a passive investment strategy through investment in equity instruments that are part of the Nifty 50 Index. It aims to replicate the underlying index of Nifty 50 to minimize the return differential between the fund and index.

Inception Date March 06, 2000
Benchmark Name Nifty 50
Fund Manager Sharwan Kumar Goyal
Objective The main investment objective of the fund is to invest in stocks comprising the Nifty 50 Index and aim to achieve returns that are equivalent to the Nifty 50 Index through “passive” investment.

 

Sector Allocation

Here is a table of the fund’s top percentage allocation of investment across sectors:

Sectors Percentage Allocation
Financial  40.2%
Technology 16.01%
Oil & Gas 13.03%
Consumer Goods 10.19%
Automobile 5.73%

 

Historical Returns of the Fund (annualised)

1-Year 2-Year 3-Year 5-Year 10-Year
45.28% 17.86 14.87% 15.97 11.24%

 

ICICI Prudential Nifty Index Fund – Growth

About Fund

ICICI Prudential Nifty Index Fund – Growth is a passively managed mutual fund that was launched in January 2013. This is rated as a high-risk investment that requires a minimum SIP investment of Rs. 1000 and lump-sum investment of Rs.100. This fund has a large exposure to the banking, software, and petroleum industries. The investments are highly concentrated in large-cap stocks that form part of the Nifty 50. 

Inception Date January 01, 2013
Benchmark Name Nifty 50
Fund Manager Mr Kayzad Eghlim
Objective The objective of the fund is to closely monitor the performance of Nifty 50 and invest in stocks that are part of the index. It does not aim to outperform or underperform the index. 

 

Sector Allocation

Here is a table of the fund’s percentage allocation of investment across major sectors:

Sector Percentage Allocation
Finance 38.1%
Technology 17.1%
Energy 14%
FMCG 8.2%
Automobile 5.9%

 

Historical Returns of the Fund (annualised)

1-Year 2-Year 3-Year 5-Year 10-Year
56.95% 15.87% 13.46% 15.30% 11.19%

HDFC Index Fund-NIFTY 50 Plan

About the fund

This is an open-ended scheme that replicates NIFTY 50 Index. The Scheme is passively managed with investments in stocks in a similar proportion and weights as in the NIFTY 50 Index. The investment strategy focuses on reducing the tracking error through regular portfolio rebalancing.

Inception Date January 1, 2013
Benchmark Name Nifty 50
Fund Manager Arun Agarwal
Objective The investment objective of the Scheme is to generate returns in line with the NIFTY 50 Index performance. The scheme, however, does not assure that the performance will be met at all times.

 

Sector Allocation

Here is a table of the fund’s percentage allocation of investment across major sectors:

Sector Percentage Allocation
Financial Services 39.58%
Technology 15.77%
Energy 15.06%
FMCG 7.46%

 

Historical Returns of the Fund (annualised)

1-Year 3-Year 5-Year Since Inception
45.75% 14.38% 16.16% 13.12%

SBI Nifty Index Fund

About the fund

This scheme invests in stocks comprising the Nifty 50 index as per the weightage in the index. The primary aim of the scheme is to achieve returns similar to the Total Returns Index of the Nifty 50 index. It also aims to minimize the performance difference between the benchmark index and the scheme. 

Inception Date January 17, 2002
Benchmark Name Nifty 50
Fund Manager Raviprakash Sharma
Objective The objective of the fund is to generate returns that are similar to the performance of the Nifty 50 index by investing in a stock composition that is similar to the index.

 

Sector Allocation

Here is a table of the fund’s percentage allocation of investment across major sectors:

Sector Percentage Allocation
Financial Services 38.55%
IT 15.36%
Oil & Gas 12.5%
Consumer Goods 9.77%
Automobile 5.48%
Pharma 3.13%

 

Historical Returns of the Fund (annualised)

1-Year 2-Year 3-Year 5-Year 10-Year
44.14% 17.01% 14.15% 15.30% 10.66%

How to Invest in Nifty Index Funds?

Investors can easily invest in the best Nifty index funds through the Finity app. Here are the steps to be followed:

  1. Download and launch Finity app on your smartphone. 
  2. Choose Équity on the home screen and click on ‘Index’ option in the next step
  3. Tap on ‘invest’ against the selected fund option from the list
  4. Choose either ‘SIP’ or ‘Lump-sum’ investment and enter the amount of investment
  5. Provide your basic details as directed by the app
  6. Complete the payment procedure to start your investment

End Note

Index funds are a good investment choice for investors who are mostly risk-averse and want predictable returns from their investment portfolio. The biggest advantage of index funds is that they do not require extensive tracking. Before investment, investors must study the historical returns of the fund, check the tracking error and make an informed investment decision.[/vc_column_text][/vc_column][/vc_row]


Frequently Asked Questions

Which Nifty Index Fund is best?
Some of the top-performing Nifty index funds are:
UTI Nifty Index Fund
HDFC Index Fund Nifty 50 Plan
LIC MF Index Fund
ICICI Prudential Nifty Index Fund

Is the Nifty index fund a good investment?
Nifty index funds are best-suited to risk-averse investors who wish to generate better returns from their investment portfolio and want to remain invested for a longer duration. As the Nifty index is made up of 50 stocks, the risk is better diversified here.

How to choose the best index fund?
Investors must first evaluate the index which they want their fund to follow. Accordingly, they must look through the available index fund options in the chosen index. It is also important to check the historical returns, and other factors like expense ratio and tracking errors before making an investment decision.

Do index funds charge fees?
Index funds generally have an expense ratio of 0.5% or less. This is far lower when compared to other mutual funds and therefore, index funds charge lesser fees when compared to other funds.

Can I sell index funds any time I want?
You can sell an index fund investment any time you like. Index funds are like mutual funds, you can always buy it from and sell it to the Mutual fund company. Unlike an ETF you don’t have to look for buyers in the market.

 

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