8 Best Index Mutual Funds to invest in India in 2020

Best Index Mutual Funds to invest in India in 2020


Many are predicting SENSEX to be at 50,000 or 1 Lakh in the next few years. However, for an investor, it would be difficult to predict where SENSEX would be by 2025 or 2030. We are sure that SENSEX/NIFTY would provide stable returns in the medium to long term. In such case investing in the underlying stocks in SENSEX/NIFTY would be a good idea. Here come Index Mutual Funds. These funds would invest in the underlying stocks of these indices in proportionate to their weightage. If stock market goes up, your index mutual fund returns would go up and vice versa. What exactly are Index Mutual Fund Schemes? How do these Index Mutual Funds work? Which are the best Index Mutual Funds to invest in India in 2019-2020?

Also Read: Best Midcap Mutual Funds to invest in 2019-2020

What are Index Mutual Funds?


Index Fund is a mutual fund scheme that is constructed with the portfolio of stocks from a particular Index. Such Index could be NIFTY, SENSEX, JUNIOR NIFTY etc., Index funds are passively managed funds. These funds not only invest in stocks of the Sensex, but also invest them in similar proportion.

How Index Mutual Funds Work?


Let me explain this with an example.

If Reliance Industries is constituting 10% of SENSEX then SENSEX INDEX FUND would also constitute 10% of Reliance shares. In simple terms, index fund would track the performance of an index.

What are various types of Index Mutual Funds?


There are 3 major types of Index Mutual Funds in India.

#1 – Sensex Index Funds: These funds track the BSE SENSEX Index as a benchmark which contains 30 stocks and invest in the same weightage these are measured in SENSEX.  

#2 – NIFTY Index Funds: These funds track the NSE NIFTY Index as a benchmark which contains 50 stocks and invest in the same weightage these are measured in NIFTY.  

#3 – Junior Nifty Index Funds: These mutual funds track the NSE NIFTY JUNIOR Index as a benchmark which contains 50 stocks and invest in the same weightage these are measured in JUNIOR NIFTY.  

List of Top 8 Best Index Mutual Funds to invest in 2020


#1 – HDFC Index Fund – Sensex Plan

#2 – UTI Nifty Index Fund – Regular Plan

#3 – HDFC Index Fund Nifty 50 Plan

#4 – Tata Index Sensex Fund – Regular Plan

#5 – ICICI Prudential Nifty Index Fund

#6 – Tata Index Nifty Fund – Regular Plan

#7 – Nippon India Index Fund – Sensex Plan

#8 – SBI Nifty Index Fund

Top 8 Best Index Mutual Funds to invest in India in 2019-2020 – Detailed View


Now let us get into detailed view about the investment objective, fund performance and various ratios of these Index mutual fund schemes.

#1 – HDFC Index Fund – Sensex Plan


Scheme Objective:  The MF aims to generate returns that are commensurate with the performance of S&P BSE Sensex, subject to tracking errors.

Performance & Ratios of HDFC Index Fund – Sensex Plan:

FundHDFC Index Fund - Sensex Plan
Returns in 3mth8.2%
Returns in 1 year13.9%
Annualised Returns in 3 years16.5%
Annualised Returns in 5 years8.7%
Annualised Returns in 10 years9.9%
Exp Ratio0.30%
Net Assets (AUM) Rs Crs544
1 Lakh invested 3 years back is now1.58 Lakhs
1 Lakh invested 5 years back is now1.51 Lakhs
1 Lakh invested 10 years back is now2.56 Lakhs
Standard Deviation12.78
Sharpe Ratio0.62
Sortino Ratio0.98
Beta1.00
Alpha-0.45
R-Squared1.00

#2 – UTI Nifty Index Fund – Regular Plan


Scheme Objective:  The mutual fund scheme seeks to invest in stocks of companies comprising Nifty 50 Index and endeavor to achieve return equivalent to Nifty 50 Index by passive investment.

Performance & Ratios of UTI Nifty Index Fund – Regular Plan:

FundUTI Nifty Index Fund - Regular Plan
Returns in 3mth8.2%
Returns in 1 year12.2%
Annualised Returns in 3 years15.0%
Annualised Returns in 5 years8.3%
Annualised Returns in 10 years9.7%
Exp Ratio0.30%
Net Assets (AUM) Rs Crs1,794
1 Lakh invested 3 years back is now1.52 Lakhs
1 Lakh invested 5 years back is now1.49 Lakhs
1 Lakh invested 10 years back is now2.51 Lakhs
Standard Deviation12.77
Sharpe Ratio0.52
Sortino Ratio0.86
Beta0.99
Alpha-1.61
R-Squared0.98

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#3 – HDFC Index Fund Nifty 50 Plan


Scheme Objective:  The fund aims to generate returns that are commensurate with the performance of the NIFTY 50 Index, subject to tracking errors.

Performance & Ratios of HDFC Index Fund Nifty 50 Plan:

FundHDFC Index Fund Nifty 50 Plan
Returns in 3mth8.1%
Returns in 1 year11.9%
Annualised Returns in 3 years14.9%
Annualised Returns in 5 years8.3%
Annualised Returns in 10 years9.6%
Exp Ratio0.30%
Net Assets (AUM) Rs Crs1,033
1 Lakh invested 3 years back is now1.52 Lakhs
1 Lakh invested 5 years back is now1.49 Lakhs
1 Lakh invested 10 years back is now2.49 Lakhs
Standard Deviation12.80
Sharpe Ratio0.51
Sortino Ratio0.85
Beta0.99
Alpha-1.74
R-Squared0.98

#4 – Tata Index Sensex Fund – Regular Plan


Scheme Objective:  The MF aims to provide medium to long term capital gains, by investing in equity shares of only those companies comprised in the BSE Sensex and in the same proportion as that of the index, regardless of their investment merit.

Performance & Ratios of Tata Index Sensex Fund – Regular Plan:

FundTata Index Sensex Fund - Regular Plan
Returns in 3mth8.1%
Returns in 1 year13.8%
Annualised Returns in 3 years16.2%
Annualised Returns in 5 years8.1%
Annualised Returns in 10 years9.3%
Exp Ratio0.46%
Net Assets (AUM) Rs Crs12
1 Lakh invested 3 years back is now0 Lakhs
1 Lakh invested 5 years back is now0 Lakhs
1 Lakh invested 10 years back is now0 Lakhs
Standard Deviation12.64
Sharpe Ratio0.60
Sortino Ratio0.95
Beta0.98
Alpha-0.65
R-Squared1.00

#5 – ICICI Prudential Nifty Index Fund


Scheme Objective:  The scheme aims to closely track the performance of Nifty 50 Index by investing in almost all the stocks and in approximately the same weightage that they represent in the index.

Performance & Ratios of ICICI Prudential Nifty Index Fund:

FundICICI Prudential Nifty Index Fund
Returns in 3mth8.1%
Returns in 1 year11.7%
Annualised Returns in 3 years14.3%
Annualised Returns in 5 years7.8%
Annualised Returns in 10 years9.6%
Exp Ratio0.45%
Net Assets (AUM) Rs Crs515
1 Lakh invested 3 years back is now1.49 Lakhs
1 Lakh invested 5 years back is now1.45 Lakhs
1 Lakh invested 10 years back is now2.51 Lakhs
Standard Deviation12.79
Sharpe Ratio0.47
Sortino Ratio0.78
Beta0.99
Alpha-2.26
R-Squared0.98

#6 – Tata Index Nifty Fund – Regular Plan


Scheme Objective:  The scheme aims to provide medium to long term capital gains, by investing in equity shares of only those companies comprised in the Nifty 50 Index and in the same proportion as that of the index, regardless of their investment merit.

Performance & Ratios of Tata Index Nifty Fund – Regular Plan:

FundTata Index Nifty Fund - Regular Plan
Returns in 3mth8.1%
Returns in 1 year11.8%
Annualised Returns in 3 years14.6%
Annualised Returns in 5 years7.7%
Annualised Returns in 10 years9.2%
Exp Ratio0.45%
Net Assets (AUM) Rs Crs19
1 Lakh invested 3 years back is now1.5 Lakhs
1 Lakh invested 5 years back is now1.45 Lakhs
1 Lakh invested 10 years back is now2.42 Lakhs
Standard Deviation12.74
Sharpe Ratio0.49
Sortino Ratio0.80
Beta0.98
Alpha-2.01
R-Squared0.98

#7 – Nippon India Index Fund – Sensex Plan


Scheme Objective:  The scheme seeks to replicate the composition of the Sensex, with a view to generate returns that are commensurate with the performance of the Sensex, subject to tracking errors.

Performance & Ratios of Nippon India Index Fund – Sensex Plan:

FundNippon India Index Fund - Sensex Plan
Returns in 3mth8.0%
Returns in 1 year13.0%
Annualised Returns in 3 years15.7%
Annualised Returns in 5 years7.7%
Annualised Returns in 10 years-
Exp Ratio0.68%
Net Assets (AUM) Rs Crs39
1 Lakh invested 3 years back is now1.55 Lakhs
1 Lakh invested 5 years back is now1.45 Lakhs
1 Lakh invested 10 years back is nowNA
Standard Deviation12.74
Sharpe Ratio0.56
Sortino Ratio0.90
Beta0.99
Alpha-1.11
R-Squared1.00

#8 – SBI Nifty Index Fund


Scheme Objective:  The mutual fund is a passively managed index fund, which would invest in all the stocks comprising Nifty 50 Index in the same proportion as their weightage in the index.

Performance & Ratios of SBI Nifty Index Fund:

FundSBI Nifty Index Fund
Returns in 3mth8.0%
Returns in 1 year11.5%
Annualised Returns in 3 years14.5%
Annualised Returns in 5 years7.7%
Annualised Returns in 10 years9.2%
Exp Ratio0.69%
Net Assets (AUM) Rs Crs522
1 Lakh invested 3 years back is now1.5 Lakhs
1 Lakh invested 5 years back is now1.45 Lakhs
1 Lakh invested 10 years back is now2.41 Lakhs
Standard Deviation12.85
Sharpe Ratio0.48
Sortino Ratio0.80
Beta0.99
Alpha-2.16
R-Squared0.98

Index Mutual Funds Vs ETFs – What’s the difference?


Exchange Traded Funds (ETFs) also invests in SENSEX/NIFTY Indices, hence you might get doubt what are the major differences here.

1) ETFs also reflect specific indices. These can be purchased and sold on NSE and BSE. You need to have a demat account to do that. On the other hand, if you have a mutual fund account or if you can visit AMC website, you can purchase these Index mutual funds. You don’t need a demat account to invest in index funds.

2) There are various ETFs apart from SENSEX/NIFTY/JUNIOR NIFTY like NIFTY NV20, NIFTY LOW VOL 30 etc., However, mutual fund schemes are currently being offered only for SENSEX, NIFTY and Nifty Junior indices.

3) There are index funds that invests in ETFs directly. However, the other way would not happen.

Why should you invest in Index Mutual Funds?


1) Diversification: You might be investing in large cap funds, midcap funds and small cap funds or even in multicap funds to diversify your portfolio. The Index fund itself has a diversified portfolio based on the market capitalization (underlying stocks) in the index from various sectors.

2) Lower Management cost: Many mutual fund schemes has 1.5% to 2.5% management cost (expense ratio). Since index mutual funds just invest in the replica of the Index, there is less management cost and comes with lower expense ratios. The expense ratios range between 0.3% to 0.8%.

3) Fund Manager mistakes avoided: There is almost zero scope for fund manager’s mistakes here except for tracking error as fund manager would invest in the underlying stocks of the index

You may like: Best SIP Mutual Fund Plans to invest for 10 years

Negative Factors in Index Mutual Funds


1) Good or Bad – Index Funds invests only in the underlying stocks of the Index. If some of the companies in the Index are not that good, fund manager cannot ignore them. They are forced to invest in such poor performance stocks too.

2) Index fund has zero scope to invest in medium and smaller company stocks that has high potential to grow. This is possible in a midcap mutual fund or small cap mutual fund scheme.

3) Some stocks might have expensive valuation, but fund manager cannot ignore them. This limits fund manager to compromise on returns from such highly expensive stocks.

List of Top Index Mutual Funds for 2020 along with performance


List of Top and Best Index Mutual Funds to invest in 2020 in India

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Suresh KP

Best Index Mutual Funds to invest in India in 2019-2020

5 comments

  • rlncts

    Hi Suresh,

    thanks for the insight on Index funds that seem to be one of point of discussion in all media.

    Can you please suggest if the below Motilal funds are good enough as equal to the ones mentioned.

    I find that the below funds have wide range than the others that has just Nifty 50 or Sensex30

    Motilal Oswal Midcap 150 Index Fund
    Motilal Oswal Nifty 500 Index Fund
    Motilal Oswal Nifty Bank Index Fund
    Motilal Oswal Nifty Small-cap 250 Inde

    • Looks you are the fan of Motilal Oswal. Don’t go overboard on single AMC. What I discused is only NIFTY50 or SENSEX Index Funds. It would depend on the risk appetite as the ones which indicated are high risk funds as they go beyond SENSEX/NIFTY50 Index.

  • Deepak P

    Hi Suresh,

    Thansk for such a wonderful insight into Index MFs. Instead of investing in Index MFs why cant we directly buy ETFs? What is the difference between Index Funds and ETFs?

    Appreciate your valuable inputs!

    Regards,
    Deepak P

    • Hello deepak, thanks for your comments. Like I indicated, one need to have demat account to buy ETFs. You cannot invest every month in ETFs like SIPs unless you want to keep an eye and buy every month on particular date which is manual and tedious job. Hence the best way to invest regularly / monthly in index portfolio is to invest in index mutual funds

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