Index Fund

Investments

An index fund passively replicates a stock index (Nifty 50, Nifty 500) by buying all constituent stocks in the same weights. Minimal manager role. Expense ratio 0.1-0.2%. The recommended starting point for new investors.

In detail

80%+ of active large-cap funds fail to beat Nifty 50 over 10+ years after fees. Index funds reliably capture market returns at minimum cost. Best options (direct plan ER): UTI Nifty 50 (0.18%), HDFC Index (0.20%), Navi Nifty 50 (0.12%).

Formula

Index fund return = Nifty return - Expense ratio - Tracking error

Real-life example

🇮🇳 India example

Sonal: Rs 5,000/month in UTI Nifty 50 Index Fund for 15 years. Nifty 15-year CAGR 13.5%. Net 13.3%. Total invested Rs 9L, corpus Rs 29.3L.

Frequently asked questions

Nifty 50 or Nifty 500 index fund? ▼

Nifty 50: large-cap only, lower volatility. Nifty 500: broader market, higher long-term return potential. For 10+ year horizon, Nifty 500 often recommended.