+91-22-48913909Nifty Index Funds: The Complete Guide for Indian Investors
For decades, Indian investors have debated whether actively managed funds or passive funds generate better long-term wealth. In recent years, index Investing has gained momentum in India, especially with the growing popularity of Nifty Index Funds.
These funds track the performance of the Nifty 50 index, which represents 50 of the largest and most liquid companies listed on the National Stock Exchange (NSE). For investors seeking diversification, low costs, and market-level returns, Nifty Index Funds have become a cornerstone of modern portfolios. But before you start investing, it’s important to understand how these funds work, their benefits, limitations, and how to select the right one.
What is a Nifty Index Fund?
A Nifty Index Fund is a type of mutual fund that passively tracks the Nifty 50 index. Instead of trying to outperform the market, it simply mirrors the index by holding the same stocks in the same proportion.
For example:
If Reliance Industries has a 10% weight in the Nifty 50, the fund will allocate about 10% of its assets to Reliance.
Similarly, HDFC Bank, Infosys, TCS, and other top companies get included in the same weightage.
This ensures that when the Nifty rises or falls, your fund’s performance closely reflects the same movement.
Why Nifty Index Funds Matter for Investors
1. Diversification Across Sectors
The Nifty 50 represents companies across 13+ sectors, including banking, IT, energy, FMCG, and pharma. By investing in one index fund, you automatically diversify across the backbone of India’s economy.
2. Low-Cost Advantage
Unlike actively managed Mutual Funds, index funds don’t require expensive research teams. This translates into lower expense ratios, often in the range of 0.1% to 0.3% — saving investors significant costs over the long term.
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3. Consistent Market Returns
Over long periods, most active funds struggle to consistently beat the index. With an index fund, you are guaranteed market-matching returns (minus small costs).
4. A Beginner-Friendly Option
For new investors, Nifty Index Funds are a simple starting point. Instead of selecting among hundreds of mutual funds, one index fund offers a ready-made, balanced Portfolio.
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Fund Selection Methodology used to find 10 funds
Top 10 Best Performing Nifty Index Funds 2026
All the funds mentioned above are ideal, we are giving you detailed analysis of 5 funds.
(Erstwhile ICICI Prudential Nifty Index Fund) An open-ended index linked growth scheme seeking to track the returns of the S&P CNX Nifty index through investment in a basket of stocks drawn from the constituents of the Nifty. Below is the key information for ICICI Prudential Nifty Index Fund Returns up to 1 year are on The principal investment objective of the scheme is to invest in stocks of companies comprising Nifty 50 Index and endeavour to achieve return equivalent to Nifty 50 by “passive” investment. The scheme will be managed
by replicating the index in the same weightage as in the Nifty 50 Index with the intention of minimising the performance differences between the scheme and the Nifty 50 Index in capital terms, subject to market liquidity, costs of trading, management expenses and other factors which may cause tracking error. The
scheme would alter the scrips/weights as and when the same are altered in the Nifty 50 Index. Research Highlights for UTI Nifty Index Fund Below is the key information for UTI Nifty Index Fund Returns up to 1 year are on The Investment Objective of the Scheme is to invest in companies whose securities are included in the Nifty and subject to tracking errors, endeavouring to attain results commensurate with the Nifty 50 under NSENifty Plan Research Highlights for Franklin India Index Fund Nifty Plan Below is the key information for Franklin India Index Fund Nifty Plan Returns up to 1 year are on The scheme will adopt a passive investment strategy. The scheme will
invest in stocks comprising the Nifty 50 Index in the same proportion as in the
index with the objective of achieving returns equivalent to the Total Returns
Index of Nifty 50 Index by minimizing the performance difference between the
benchmark index and the scheme. The Total Returns Index is an index that
reflects the returns on the index from index gain/loss plus dividend payments
by the constituent stocks. Research Highlights for SBI Nifty Index Fund Below is the key information for SBI Nifty Index Fund Returns up to 1 year are on The investment objective of the scheme is to replicate the Nifty 50 by investing in securities of the Nifty 50 in the same proportion / weightage. However, there is no assurance or guarantee that the objectives of the scheme will be realized
and the scheme does not assure or guarantee any returns . Research Highlights for Bandhan Nifty Fund Below is the key information for Bandhan Nifty Fund Returns up to 1 year are on 1. ICICI Prudential Nifty Index Fund
ICICI Prudential Nifty Index Fund
Growth Launch Date 26 Feb 02 NAV (28 Jan 26) ₹255.359 ↑ 1.68 (0.66 %) Net Assets (Cr) ₹15,405 on 31 Dec 25 Category Others - Index Fund AMC ICICI Prudential Asset Management Company Limited Rating ☆☆ Risk Moderately High Expense Ratio 0.36 Sharpe Ratio 0.48 Information Ratio -9.95 Alpha Ratio -0.42 Min Investment 5,000 Min SIP Investment 100 Exit Load NIL Growth of 10,000 investment over the years.
Date Value Returns for ICICI Prudential Nifty Index Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 28 Jan 26 Duration Returns 1 Month -2.7% 3 Month -2.3% 6 Month 2.9% 1 Year 11.3% 3 Year 13.7% 5 Year 13.7% 10 Year 15 Year Since launch 14.5% Historical performance (Yearly) on absolute basis
Year Returns 2024 11.4% 2023 9.6% 2022 20.7% 2021 5.2% 2020 24.9% 2019 15.2% 2018 12.8% 2017 3.4% 2016 28.7% 2015 3.6% Fund Manager information for ICICI Prudential Nifty Index Fund
Name Since Tenure Data below for ICICI Prudential Nifty Index Fund as on 31 Dec 25
Asset Allocation
Asset Class Value Top Securities Holdings / Portfolio
Name Holding Value Quantity 2. UTI Nifty Index Fund
UTI Nifty Index Fund
Growth Launch Date 6 Mar 00 NAV (28 Jan 26) ₹174.562 ↑ 1.15 (0.66 %) Net Assets (Cr) ₹26,947 on 31 Dec 25 Category Others - Index Fund AMC UTI Asset Management Company Ltd Rating ☆☆ Risk Moderately High Expense Ratio 0.29 Sharpe Ratio 0.49 Information Ratio -9.35 Alpha Ratio -0.28 Min Investment 5,000 Min SIP Investment 500 Exit Load NIL Growth of 10,000 investment over the years.
Date Value Returns for UTI Nifty Index Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 28 Jan 26 Duration Returns 1 Month -2.7% 3 Month -2.2% 6 Month 2.9% 1 Year 11.4% 3 Year 13.8% 5 Year 13.9% 10 Year 15 Year Since launch 11.7% Historical performance (Yearly) on absolute basis
Year Returns 2024 11.6% 2023 9.6% 2022 20.9% 2021 5.3% 2020 25.2% 2019 15.5% 2018 13.2% 2017 4.3% 2016 29.7% 2015 4% Fund Manager information for UTI Nifty Index Fund
Name Since Tenure Data below for UTI Nifty Index Fund as on 31 Dec 25
Asset Allocation
Asset Class Value Top Securities Holdings / Portfolio
Name Holding Value Quantity 3. Franklin India Index Fund Nifty Plan
Franklin India Index Fund Nifty Plan
Growth Launch Date 4 Aug 00 NAV (28 Jan 26) ₹204.663 ↑ 1.34 (0.66 %) Net Assets (Cr) ₹787 on 31 Dec 25 Category Others - Index Fund AMC Franklin Templeton Asst Mgmt(IND)Pvt Ltd Rating ☆ Risk Moderately High Expense Ratio 0.63 Sharpe Ratio 0.47 Information Ratio -3.74 Alpha Ratio -0.53 Min Investment 5,000 Min SIP Investment 500 Exit Load 0-30 Days (1%),30 Days and above(NIL) Growth of 10,000 investment over the years.
Date Value Returns for Franklin India Index Fund Nifty Plan
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 28 Jan 26 Duration Returns 1 Month -2.7% 3 Month -2.3% 6 Month 2.9% 1 Year 11.1% 3 Year 13.5% 5 Year 13.4% 10 Year 15 Year Since launch 12.6% Historical performance (Yearly) on absolute basis
Year Returns 2024 11.3% 2023 9.5% 2022 20.2% 2021 4.9% 2020 24.3% 2019 14.7% 2018 12% 2017 3.2% 2016 28.3% 2015 3.3% Fund Manager information for Franklin India Index Fund Nifty Plan
Name Since Tenure Data below for Franklin India Index Fund Nifty Plan as on 31 Dec 25
Asset Allocation
Asset Class Value Top Securities Holdings / Portfolio
Name Holding Value Quantity 4. SBI Nifty Index Fund
SBI Nifty Index Fund
Growth Launch Date 17 Jan 02 NAV (28 Jan 26) ₹224.227 ↑ 1.48 (0.66 %) Net Assets (Cr) ₹11,816 on 31 Dec 25 Category Others - Index Fund AMC SBI Funds Management Private Limited Rating ☆ Risk Moderately High Expense Ratio 0.47 Sharpe Ratio 0.47 Information Ratio -20.55 Alpha Ratio -0.49 Min Investment 5,000 Min SIP Investment 500 Exit Load 0-15 Days (0.2%),15 Days and above(NIL) Growth of 10,000 investment over the years.
Date Value Returns for SBI Nifty Index Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 28 Jan 26 Duration Returns 1 Month -2.7% 3 Month -2.3% 6 Month 2.8% 1 Year 11.2% 3 Year 13.6% 5 Year 13.6% 10 Year 15 Year Since launch 14% Historical performance (Yearly) on absolute basis
Year Returns 2024 11.3% 2023 9.5% 2022 20.7% 2021 5.1% 2020 24.7% 2019 14.6% 2018 12.5% 2017 3.8% 2016 29.1% 2015 3.4% Fund Manager information for SBI Nifty Index Fund
Name Since Tenure Data below for SBI Nifty Index Fund as on 31 Dec 25
Asset Allocation
Asset Class Value Top Securities Holdings / Portfolio
Name Holding Value Quantity 5. Bandhan Nifty Fund
Bandhan Nifty Fund
Growth Launch Date 30 Apr 10 NAV (28 Jan 26) ₹54.5845 ↑ 0.36 (0.66 %) Net Assets (Cr) ₹2,268 on 31 Dec 25 Category Others - Index Fund AMC IDFC Asset Management Company Limited Rating ☆☆ Risk Moderately High Expense Ratio 0.6 Sharpe Ratio 0.46 Information Ratio -12.78 Alpha Ratio -0.63 Min Investment 100 Min SIP Investment 1,000 Exit Load 0-7 Days (1%),7 Days and above(NIL) Growth of 10,000 investment over the years.
Date Value Returns for Bandhan Nifty Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 28 Jan 26 Duration Returns 1 Month -2.7% 3 Month -2.3% 6 Month 2.8% 1 Year 11% 3 Year 13.5% 5 Year 13.5% 10 Year 15 Year Since launch 11.4% Historical performance (Yearly) on absolute basis
Year Returns 2024 11.2% 2023 9.2% 2022 20.5% 2021 5.4% 2020 24.4% 2019 16.2% 2018 12.9% 2017 4.4% 2016 29.5% 2015 3.9% Fund Manager information for Bandhan Nifty Fund
Name Since Tenure Data below for Bandhan Nifty Fund as on 31 Dec 25
Asset Allocation
Asset Class Value Top Securities Holdings / Portfolio
Name Holding Value Quantity
Historical Performance of Nifty Index
To understand why these funds are attractive, let’s look at the Nifty’s performance:
- 10-year CAGR (2013–2023): ~12.5%
- 5-year CAGR (2018–2023): ~11.2%
- 1-year return (2023): ~20%
This shows that over long horizons, Nifty Index Funds have generated steady wealth, beating inflation and offering compounding growth.
(Note: Returns vary depending on market cycles, but long-term investors benefit from India’s economic growth story.)
Risks of Nifty Index Funds
While index funds are considered safe, they are not risk-free:
Market Risk – If the Nifty falls due to global or domestic factors, your fund will also fall.
Tracking Error – Slight mismatches between the index and fund returns can occur due to costs or timing.
No Outperformance – Unlike active funds, index funds will never beat the market — they only replicate it.
Nifty Index Fund vs Nifty ETF: What’s the Difference?
Many investors confuse index funds with ETFs. Here’s the difference:
| Feature | Nifty Index Fund | Nifty ETF |
|---|---|---|
| Trading | Bought/sold like mutual funds (NAV-based) | Traded on stock exchanges like shares |
| Convenience | SIP option available | Requires Demat account |
| Liquidity | Daily NAV-based | Intraday trading possible |
| Costs | Slightly higher than ETFs | Slightly lower expense ratio |
For most retail investors, index funds via SIPs are more convenient than ETFs.
How Invest in Nifty Index Funds Online?
Open Free Investment Account for Lifetime at Fincash.com.
Complete your Registration and KYC Process
Upload Documents (PAN, Aadhaar, etc.). And, You are Ready to Invest!
How to Choose the Best Nifty Index Fund
When selecting an index fund, look beyond just returns. Key factors include:
- Expense Ratio – Lower costs = better long-term returns.
- Tracking Error – Smaller error ensures closer alignment with Nifty performance.
- Fund Size (AUM) – Larger funds usually have better liquidity and efficiency.
- Fund House Reputation – Choose AMCs with strong track records in passive funds.
Some of the well-known Nifty Index Funds in India include:
- HDFC Index Fund – Nifty 50 Plan
- UTI Nifty Index Fund
- ICICI Prudential Nifty Index Fund
- Nippon India Index Fund – Nifty 50 Plan
Who Should Invest in Nifty Index Funds?
- ✅ Beginners starting their investment journey.
- ✅ Investors seeking long-term wealth creation.
- ✅ Those who prefer passive investing with low costs.
- ✅ Investors who want India’s growth story in one basket.
However, if you seek Alpha (market-beating returns), active funds or thematic strategies may be better.
Conclusion
Nifty Index Funds represent the power of passive investing in India. By offering low costs, diversification, and steady returns, they provide a reliable wealth-building tool for retail investors.
As India’s economy continues to expand, the Nifty 50 will remain a reflection of the country’s growth. For investors who want simplicity, transparency, and long-term compounding, Nifty Index Funds deserve a place in their portfolio.
👉 The real question is not whether you should invest, but how soon you start.
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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Research Highlights for ICICI Prudential Nifty Index Fund