An index fund is a mutual fund that solely tracks a specific index in terms of composition and performance. In other words, index funds always try to mimic the underlying benchmark index. The benchmark indices for Indian index funds could be NSE Nifty-50, BSE Sensex, Bank Nifty, NSE Nifty Next-50, etc.
Best performing index funds in 2021
1. Nippon Indian Index Sensex (1 year return – 17.5% – as of June 30, 2021)
This index fund is a large-cap fund from Nippon India Mutual Fund. This fundhas been around for over 8 years. As of June 30, 2021, it hasINR 148 crores in assets under management (AUM). The expense ratio of this fund is 0.15%.As it is tracking the benchmark Sensex, this fund has exposure to sectors like FMCG, finance, technology and energy, among others, that make a part of Sensex.
2. HDFC Index Sensex Fund (1 year return – 17.48% – as of June 30, 2021)
HDFC Index Sensex Direct Plan-Growth is a large cap mutual fund scheme, which has been around for over 8 years. As of June 30, 2021, it has assets under management (AUM) worth INR 2,210 crores. The expense ratio of this fund is 0.2%.
3. IDFC Nifty Fund (1 year return – 17.43% – as of June 30, 2021)
IDFC Nifty fund is a large cap mutual fund scheme. As of June 30, 2021, it has assets under management (AUM) worth INR 314 crores. The expense ratio of this fund is 0.16%.
4. TATA Index Sensex Fund (1 year return – 17.39% – as of June 30, 2021)
As of June 30, 2021, this large cap fund has INR 77 crores in assets under management (AUM). The fund’s expense ratio is 0.84 per cent, which is higher than the expense ratios charged by most other large cap funds.
Why to invest in index funds?
As an investor, it is crucial for you to build a diverse portfolio to mitigate risks. Investing in index funds is likely to be less risky when compared to other investment avenues.
Choosing the right investment avenues for is critical for your financial plan to become a reality. You can even seek advice from a financial expert who can guide you in a systematic manner to identify your risk appetite and then suggest investment instruments to you. These investments – mutual funds and stock baskets – can help you reach your dreams or financial goals over a period of time.