Index mutual funds passively track a market index like the Nifty 50, Sensex, Nifty Next 50 or Nifty Midcap 150 by replicating its composition and weightage. Unlike actively managed funds, index funds do not rely on a fund manager’s stock-picking skills, resulting in significantly lower expense ratios typically ranging from 0.10% to 0.50%. This cost advantage compounds meaningfully over long investment horizons.
Index funds have gained massive popularity in India, with AUM growing over 10x in the last five years. They are ideal for investors who believe in efficient markets and prefer a low-cost, transparent approach to equity investing. Warren Buffett himself has repeatedly recommended index funds for most investors.
| # | Fund Name | NAV (₹) | 1Y Return ▼ | 3Y CAGR | 5Y CAGR |
|---|---|---|---|---|---|
| 1 | ICICI Prudential NASDAQ 100 Index Fund | 24.05 | +55.65% | +34.37% | — |
| 2 | Motilal Oswal S&P 500 Index Fund | 32.34 | +36.65% | +25.96% | +18.30% |
| 3 | ICICI Prudential Nifty200 Value 30 Index Fund | 11.35 | +19.71% | — | — |
| 4 | Axis Nifty500 Value 50 Index Fund - Direct Plan - Growth Option | 11.76 | +19.21% | — | — |
| 5 | UTI Nifty 500 Value 50 Index Fund - Direct Plan - Growth Option | 22.87 | +18.71% | +31.19% | — |
| 6 | Bandhan Nifty 500 Value 50 Index Fund Direct Plan - Growth | 11.65 | +17.37% | — | — |
| 7 | Kotak Nifty Commodities Index Fund | 12.61 | +16.35% | — | — |
| 8 | SBI BSE PSU BANK INDEX FUND | 13.33 | +15.68% | — | — |
| 9 | Edelweiss MSCI India Domestic & World Healthcare 45 Index Fund Direct Plan - Growth | 22.60 | +15.06% | +20.44% | +13.37% |
| 10 | Motilal Oswal Nifty Capital Market Index Fund | 12.53 | +14.02% | — | — |
| 11 | Tata Nifty MidSmall Healthcare Index Fund | 14.09 | +13.94% | — | — |
| 12 | Motilal Oswal Nifty MidSmall Healthcare Index Fund | 11.60 | +13.90% | — | — |
| 13 | Tata Nifty Capital Markets Index Fund - Direct Plan Growth Option | 14.34 | +13.62% | — | — |
| 14 | Motilal Oswal Nifty MidSmall Financial Services Index Fund | 13.99 | +13.37% | — | — |
| 15 | ICICI Prudential Nifty Pharma Index Fund | 18.76 | +12.16% | +23.04% | — |
| 16 | Nippon India Nifty Auto Index Fund - Direct Plan- Growth Option | 11.17 | +11.41% | — | — |
| 17 | ICICI Prudential Nifty Auto Index Fund | 21.05 | +11.33% | +21.61% | — |
| 18 | DSP BSE SENSEX Next 30 Index Fund | 12.04 | +11.11% | — | — |
| 19 | Tata Nifty Auto Index Fund | 11.88 | +11.07% | — | — |
| 20 | Navi Nifty India Manufacturing Index Fund | 19.10 | +10.43% | +21.40% | — |
Data sourced from AMFI & mfapi.in. Returns are annualised CAGR. Past performance doesn't guarantee future results. Last updated: 07 Jun 2026
Frequently Asked Questions
What is the expense ratio of index funds?
Index funds in India typically charge 0.10% to 0.50% as expense ratio, which is significantly lower than actively managed funds that charge 1-2%. This cost saving directly adds to your returns over time.
Which index fund is best – Nifty 50 or Sensex?
Both are good choices. Nifty 50 offers broader diversification with 50 stocks compared to Sensex’s 30 stocks. Nifty Next 50 index funds offer exposure to the next tier of large cap companies for slightly higher growth potential.
Do index funds beat active funds?
Over long periods (10+ years), a majority of actively managed large cap funds have failed to beat their benchmark index after accounting for higher expense ratios. This makes index funds an increasingly popular choice.
Are index funds good for beginners?
Yes, index funds are excellent for beginners due to their simplicity, low cost, broad diversification and transparency. A Nifty 50 index fund is often recommended as a first equity investment.