List of Index Mutual Funds and ETFs in India: What to choose and what to avoid

Last Updated on December 28, 2021 at 6:45 pm

As I started preparing for a talk on Index investing, I needed to know how many indices are passively tracked and so here is a list of index mutual funds and exchange-traded funds (ETFs) in India sorted by their benchmark. I also indicate which ones to choose and which ones to avoid. Surprised to find as many 75 index funds and ETFs.

Many people worry about costs associated with active mutual funds and believe “in the long run” they will not beat passive (index) funds. Well “beat” does not simply mean more returns and it is important to remember that risk is in real-time and returns are always in hindsight. So  I would first suggest that you first consider the advantages and disadvantages of index investing

If you are convinced that (1) you will worry if other funds beat the index you are tracking in the short/long-term (2) if you are convinced that you can manage risk actively and systematically then you can be an index investor Then you can consider your options.

List of Index Mutual Funds and ETFs in India

This list is compiled from Value Research and includes one NFO: UTI Nifty Next 50 Index Fund-Direct Plan that will list at the end of this month. Some expense ratios are unknown and are left blank. Now let us consider the funds by benchmark

1 BSE 100, NSE 100 and BSE 500 based ETFs

1. SBI ETF BSE 100 Fund
2. LIC MF Exchange Traded Fund – Nifty 100
3. ICICI Prudential Nifty 100 ETF
4. Reliance ETF Nifty 100
5. ICICI Prudential S&P BSE 500 ETF

Verdict: Avoid.

(1) Nothing special about NIfty 100. Even large cap funds with 80% sotcks from these top 100 stocks can pick 20% elsewhere and should be able to beat NIfty 100 or BSE 100 after expenses.

(2) Will be frustrating Too low AUM in these ETFs (LIC has the Lions share among these four). Huge difference between price and NAV of these ETFS. So you cannot place market orders when you buy or sell these ETFs. You will have to place limit orders  (max buy price or min sell price) and this means having to wait. There is no risk per se as the underlying stocks in the ETFs are quite liquid but it can be frustrating. How long can an AMC continue such low AUM ETFs? More about ETFs in the next post.

2 International ETFs

I have excluded feeder funds from this list. Is something else missing?

1. Reliance ETF Hang Seng BeES  (Hang Seng Hong Kong)
2. Motilal Oswal NASDAQ 100 Exchange Traded Fund  (Nasdaq 100)

Verdict: The indices are good in terms of reward and diversification, but the expenses are on the higher side, the taxation is a debt funds and there are huge differences between price and NAV. Use only if you are willing to wait to buy and sell at the right price. Not necessary imo.

3 Nifty Next 50

Say hello to the star index – pretty volatile with the potential for greater reward: Nifty Next 50: The Benchmark Index That No Mutual Fund Would Touch?!

1. Reliance ETF Junior BeES
2. ICICI Prudential Nifty Next 50 Index Fund – Direct Plan
3. IDBI Nifty Junior Index Fund – Direct Plan
4. SBI ETF Nifty Next 50 Fund
5. UTI Nifty Next 50 Index Fund – Direct Plan
6. UTI Nifty Next 50 Exchange Traded Fund – Regular Plan

Verdict:  Buy (if you understand pros and cons)! Avoid the ETFs (same reasons as above – low AUM) and choose index funds.

Freefincal Nifty Next 50 Articles

Evaluating the Nifty Next 50 as an Index Fund

Warning! Nifty Next 50 is NOT a large cap index! This post has an risk-reward overview of many indices.

Are Nifty Smart Beta (strategic) Indices better than the Nifty Next 50?

4 Equal Weight Indices

1. DSP BlackRock Equal Nifty 50 Fund – Direct Plan
2. Principal Nifty 100 Equal Weight Fund – Direct Plan
3. Sundaram Smart NIFTY 100 Equal Weight Fund – Direct Plan

Verdict: Avoid the Nifty 50 Equal Weight fund as there is nothing special about it – Nifty 50 Equal Weight Index vs Nifty 50: Does equal weight result in more returns?

The Nifty 100 Equal Weight Index is a lower-risk and reasonable reward option when compared to the NIfty Next 50 See: Warning! Nifty Next 50 is NOT a large cap index! I had also written about this earlier: The NIFTY 100 Equal Weight Index As a Mutual Fund Benchmark

I am happy to see no ETFs in this category. I wonder if this is because equal weight unit creations are difficult?! In any case, the N100EW index funds can be considered but they have low AUM and if there is no interest, the fund will be wound up. Of course, this is only tax risk (you pay tax if the fund closes suddenly) and not an investment risk

5 Midcap ETFs

1. ICICI Prudential Midcap Select ETF based on S&P BSE Midcap Select TRI
2. Motilal Oswal Midcap 100 Exchange Traded Fund  based on NIFTY Midcap 100 TRI

verdict: It is a pity that the only MIdcap index fund – Principal Index Fund – Midcap was closed and merged with N100EW. If there are midcap index funds then they can be seriously considered for investment. I wonder if the AMCs are interested as profits would be low. Considering both of the above are low AUM ETFs and the underlying securities will have lower liquidity than large-cap ETFs, avoid!

6 Sectoral or special indices

1. Edelweiss Exchange Traded Fund-Nifty Bank (Nifty Bank)
2. Reliance ETF Bank BeES (Nifty Bank)
3. Kotak Banking ETF Fund Regular (Nifty Bank)
4. SBI ETF Nifty Bank Fund (Nifty Bank)
5. Reliance ETF Shariah BeES (NIFTY 50 Shariah)
6. CPSE Exchange Traded Fund (NIFTY CPSE)
7. Reliance ETF Dividend Opportunities (NIFTY Dividend Opp 50)
8. Reliance ETF Consumption (NIFTY India Consumption)
9. Reliance ETF Infra BeES (NIFTY Infrastructure)
10. Reliance ETF PSU Bank BeES (NIFTY PSU Bank)
11. Kotak PSU Bank ETF (NIFTY PSU Bank)
12. BHARAT 22 ETF S&P (BSE Bharat 22 TRI)

Verdict: Perhaps the high aum ETFs (red) can be considered for trading (pl do due liquidity diligence) but for investing avoid all!

7 Strategic or Smart Beta ETFs

1. Edelweiss ETF – Nifty Quality 30 (Nifty Quality 30)
2. ICICI Prudential Nifty Low Vol 30 ETF (Nifty Low Vol 30)
3. Reliance ETF NV20 (NIFTY 50 Value 20 TRI)
4. ICICI Prudential NV20 ETF (NIFTY 50 Value 20 TRI)
5. Kotak NV 20 ETF (NIFTY 50 Value 20 TRI)

Verdict: A strategic or smart beta index is one in which stocks are picked for their low volatility, alpha, quality or value. So it is an actively chosen passive index.  They can offer better reward than Nifty 50 or Nifty Next 50 at lower risk but these are ETFs with low AUM. Even though underlying stocks are solid, it can be frustrating. So avoid.

freefincal strategic index resources

Are Nifty Smart Beta (strategic) Indices better than the Nifty Next 50?

Picking Stocks With Low Volatility: A simple, but effective strategy?

How new stock investors can quickly start investing using NIFTY Multi-Factor Indices

Nifty Strategy Indices as Mutual Fund Benchmarks

8 NIfty and Sensex based Index funds and ETFs

There are 39 funds based on Sensex (13) or Nifty (26)! These are top four ETFs in terms of AUM (in Cr).

1. SBI ETF Nifty 50 (35106.78)
2. SBI ETF Sensex (10968.11)
3. UTI Nifty Exchange Traded Fund (7930.73)
4. UTI Sensex Exchange Traded Fund (2627.14)

Verdict: Use the large aum and liquid ETFs for trading. Choose an Index fund with reasonable AUM (say > 500 cr) if you hate worrying about fund manager performance and are a die-hard indexer.

Do not think India has entered the age of indexed. If you idea of indexing is higher returns regardless of risk then the NIfty Next 50 has a fantastic record for the last ten years. So from that viewpoint, India is in the age of index investing. Of course, Index funds will not become popular (and are not as popular in the US as people who read Jack Bogle think) for one simple reason: commissions. The difference between a good product and a bad product is commissions. To make a bad product good simply increase commissions and see the results.

Thinking of an e-book on index investing. This post will help. Will need to add a couple of more on ETFs. Will do next. So what do you think?

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