Six equity index fund model portfolios

Published: September 21, 2022 at 6:00 am

This article lists six model equity portfolios by combining different equity index funds. We now have both the evidence and the variety to create such portfolios.

We have mentioned several times in the past that index funds are the way to go for new mutual fund investors. Even in the mid cap and small cap space, index investing is the choice.

We now have variety in the equity index fund space, but tracking errors can be huge beyond the top 100 stocks sorted by free-float market capitalization. So we need to tread carefully. See: Not all index funds are the same! Beyond top 100 stocks tracking errors are huge!

When we refer to “portfolio” here, we refer only to the equity part. For stability, a proper investment portfolio should have a good dose of fixed income. There is no preferred or “best” model. All of them are fairly equivalent. Which one we choose is up to us. Please note that the following is our opinion and not an exhaustive list of ways index funds can be combined.

Model 1: Nifty or Sensex Index fund. One fund. That is it. Additions to this are almost always driven by a sense of missing out. This is a smart, simple choice. Remember that aggressive investors are not those who take on more risk. Aggressive investors are those who increase their income and, therefore investments aggressively.


Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥

Note: There is not much difference between Sensex and Nifty index funds. However, Sensex ETFs and Nifty ETFs are not the same!

Also, we recommend not using any ETF for investment. The price-NAV differences can sometimes be significant and take a long while to sort out. You are not as free to redeem from an ETF as from an index fund.

Model 2: Nifty or Sensex Index fund + Nifty Next 50 Index fund. For weights, see: Combine Nifty & Nifty Next 50 funds to create large, mid cap index portfolios. It must be understood that the NIfty Next 50 can be a frustrating index to hold from time to time. So one must be ready for this. See: Is it time to exit from Nifty Next 50?

Model 3: Nifty 100 Index fund. See: Axis Nifty 100 Index Fund Performance Report

Model 4: S&P BSE Low Volatility 30 fund. Suppose you don’t mind being a little adventurous and investing in a factor-based large and mid cap index with little tracking error history. It may not be the most prudent choice one would come across, but as a model portfolio, it is one. See: UTI S&P BSE Low Volatility Index Fund Review

Model 5: Nifty or Sensex Index fund + S&P BSE Low Volatility 30 fund. Here the factor-based index can play a much smaller part, say 20-25%. Those who wish to take on more risk can replace the low volatility index with an Alpha + Low Vol index fund. See: Nippon India Nifty Alpha Low Volatility 30 Index Fund Review

Model 6: Nifty or Sensex Index fund + (20-30%) Nifty Midcap Quality 50 Index fund. For those who wish to replace the Nifty Next 50 with a “proper” midcap index. The quality factor is arbitrarily defined and may not always outperform its Midcap parent. The Quality 50 index may have much higher tracking errors than Nifty/Sensex funds. See: DSP Nifty Midcap 150 Quality 50 Index Fund Review

There are plenty of other index funds to choose from: Midcap, Small cap, Equal-weight, Large Midcap, Alpha, Value, Momentum, sectoral etc. This is the full list: List of Equity Index Funds in India. One can also use them for creating such model portfolios, but as of now, we are not inclined to do so.

Do share this article with your friends using the buttons below.

🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
Follow Freefincal on Google News
Follow Freefincal on Google News
Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.
Subscribe to the freefincal Youtube Channel.
Follow freefincal on WhatsApp Channel
Follow freefincal on WhatsApp
Podcast: Let's Get RICH With PATTU! Every single Indian CAN grow their wealth! 
Listen to the Lets Get Rich with Pattu Podcast
Listen to the Let's Get Rich with Pattu Podcast
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.
Lets Get RICH With PATTU podcast on YouTube
Let's Get RICH With PATTU podcast on YouTube.

  • 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 with 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 over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!

Explore the site! Search among our 2000+ articles for information and insight!

About The Author

Pattabiraman editor freefincalDr. 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, 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 what 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 you 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!
Both boy and girl version covers of Chinchu gets a superpower
Both the boy and girl version covers of Chinchu gets a superpower.
Most investor problems can be traced to a lack of informed decision-making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it and teach him several key ideas of decision-making and money management is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
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!
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 & it's 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
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished 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 Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis 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

Travel-Training-Kit-Cover-new This is an in-depth dive analysis 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)