Last Updated on December 29, 2021 at 5:14 pm
Axis Nifty 100 Index Fund is an open-ended index fund tracking the NIFTY 100 Index. Launched in Oct 2019 it has a Total Expense Ratio (TER) of 0.16% for the direct plan and an impressive 436 crores of AUM. Is this however too expensive? Is it worth shifting from a Nifty 50 index fund to Axis Nifty 100? Let us find out.
The TER of the regular plan is an astoundingly high 1.01%. GIven the banking ties, the AMC has, much of 436 crores AUM is likely to be from the regular plan. A 1% fee for an index fund is nothing short of tragic given how much the regulator and industry like to talk about “mutual fund awareness”.
Conveniently the AMFI has stopped updating regular and direct plan AUM breakup each month. We will have to wait until Jan 2020 to know the quarterly average AUM. For a direct plan investor, it does not matter where the AUM comes from though as long as it is a healthy number. Otherwise, there might be a situation such as this: These five index funds beat their indices! Why you should avoid them!
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
During this NFO period, this author had reviewed the fund –Axis Nifty 100 Index Fund Review: Replacement for active large cap funds? – but suggested waiting at least six months for the fund to get established and some history to calculate the tracking error with.
Now that we have two pieces of the puzzle: a good AUM and a reasonable expense ratio (see below for comparison), it would be reasonable to guess that the tracking error would not be too high (although it could be). The questions for an investor now are:
- Can I switch from active large caps to this fund?
- Can I switch from NIfty 50 index funds to Axis Nifty 100?
- Can I use Axis Nifty 100 instead of a Nifty 50 and Nifty Next 50 combination?
Let us answer this question by busting a myth. NIfty 100 is not equal to Nifty 50 + Nifty Next 50.
As of Nov 30th 2019, SBI Life has the highest weight in Nifty Next 50. (Source factsheet). However, in NIfty 100, SBI Life only has a weight of 0.62%! This means all other stocks of Nifty Next 50 will have a proportionally lower weight in NIfty 100. The latest stocks weights can be obtained from this NSE monthly report page.
Meaning, NIfty 100 = 85% Nifty 50 + 15% Nifty Next 50 (approximately). As of Nov 2019, the Nifty 100 has 86.52% of NIfty 50 stocks. It is important for investors to understand that they are not buying 100 stocks in equal measure. The same argument also applies to Motilal Oswal Nifty 500 Fund (Avoid & stick to Nifty 50 Index funds) which, by the way, has a TER of 0.38% (direct plan) – atrociously expensive (given the options, see list below) for getting Nifty-like returns!
List of index funds (excluding ETFs) with expense ratio arranged in ascending order
A Sensex or Nifty index fund with 0.1% TER and at least (say) 300 Crores AUM can make a shortlist. Then a comparison of the last few years returns with the benchmark (dividends included) can indicate the extent of tracking error.
In comparison to other funds, a TER of 0.16% for managing 100 stocks is indeed quite reasonable. While Axis Nifty 100 Fund is no doubt a decent pick, the real question investors should ask is, is it worth paying 60% more in fees for an extra 50 stocks that make up about 15% of the portfolio?. In other words, does it make sense to choose Axis Nifty 100 Index fund instead of a Nifty 50 index fund?
| Fund | Expense Ratio(%) | AUM |
| Tata Index Fund-Nifty Plan | 0.05 | 18.63 |
| HDFC Index Fund-NIFTY 50 Plan | 0.10 | 1032.52 |
| HDFC Index Fund-Sensex | 0.10 | 544.47 |
| ICICI Pru Nifty Index Fund | 0.10 | 514.91 |
| ICICI Pru Sensex Index Fund | 0.10 | 42.33 |
| Nippon India Index Fund – Nifty Plan | 0.10 | 39.04 |
| Nippon India Index Fund – Sensex Plan | 0.10 | 156.45 |
| UTI Nifty Index Fund(D) | 0.10 | 1793.60 |
| Tata Index Fund-Sensex Plan | 0.11 | 12.48 |
| IDFC Nifty Fund | 0.15 | 190.83 |
| Axis Nifty 100 Index Fund-Direct | 0.16 | 436.43 |
| DSP NIFTY 50 Index Fund | 0.20 | 24.29 |
| UTI Nifty Next 50 Index Fund | 0.27 | 569.11 |
| DSP NIFTY Next 50 Index Fund | 0.29 | 44.70 |
| SBI Nifty Index Fund | 0.29 | 521.79 |
| IDBI Nifty Index Fund | 0.30 | 229.45 |
| Aditya Birla SL Index Fund | 0.33 | 144.76 |
| DSP Equal Nifty 50 Fund | 0.38 | 110.87 |
| Motilal Oswal Nifty 500 Fund | 0.38 | 22.14 |
| Motilal Oswal Nifty Bank Index Fund | 0.38 | 19.27 |
| Motilal Oswal Nifty Midcap 150 Index Fund | 0.38 | 23.98 |
| Motilal Oswal Nifty Smallcap 250 Index Fund | 0.38 | 16.02 |
| ICICI Pru Nifty Next 50 Index Fund | 0.39 | 683.27 |
| Sundaram Smart NIFTY 100 Eq Weight Fund | 0.46 | 21.84 |
| LIC MF Index Fund-Nifty Plan | 0.47 | 29.28 |
| IDBI Nifty Junior Index Fund | 0.49 | 54.31 |
| Franklin India Index Fund-NSE Nifty | 0.53 | 289.31 |
| LIC MF Index Fund-Sensex Plan | 0.58 | 21.30 |
| Principal Nifty 100 Equal Weight Fund | 0.74 | 18.08 |
| Taurus Nifty Index Fund | 0.74 | 1.34 |
Nifty 50 TRI vs Nifty 100 TRI Performance Comparison
Let us consider every possible 5,7 and 10-year returns of NIfty 50 and Nifty 100 and the excess return of Nifty 100 over Nifty 50 (that is Nifty 100 return minus Nifty 50 return). Please ignore the horizontal white line (see comment below)
Five Years
Seven Years
Ten Years
Nifty 100 does not always beat Nifty 50 and even when it does, the excess return would be on either side of 1%. Take away 0.06% which is the TER difference, then the excess return could be (with luck) about 0.5%-0.6%. Thanks to Saurabh Mittal for pointing out a mistake (see comment below)
If this seems important in the long run (not a. guarantee unlike expenses), then you can consider Axis Nifty 100 Index fund. If this seems like taking a chance, stick to an established Nifty 50 index fund.
If you using a combination of Nifty 50 and Nifty Next 50 index funds with the latter 20% or more, then switching to a Nifty 100 index fund will change the risk-reward balance.
In summary, while the TER of Axis Nifty 100 Index fund is reasonably low and inviting enough, in comparison to an established Nifty or Sensex index fund, the gain for the extra fee may not always be justifiable. So relative to these it is a bit expensive.
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 7000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 2,500 investors and advisors use this!
Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter using the form below.
- Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
About The Author
Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our YouTube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel
This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)