5 Best Index Mutual Funds to invest in 2020 to beat corona virus situation

Top 5 Best Index Mutual Funds to beat corona virus situation


Last year, many predicted SENSEX to be at 50,000 or 1 Lakh by the end of 2020 or beginning of 2021. While we are sure that SENSEX/NIFTY would provide stable returns in the medium to long term, stock markets across the world has been crashing in the last 7-8 weeks due to the Corona virus situation. While no one knows the bottom of the stock market crash in India, investing in index mutual funds could be the best bet in this covid-19 crisis. What are Index Mutual Fund Schemes and how do they work? Which are the Top 5 Best Index Mutual Funds to invest now in 2020 to beat corona virus situation? Would this be better than Largecap Mutual Funds to invest now?

What are Index Funds?


In simple terms, Index fund would invest in 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 us see how index mutual funds work with an example.

As on 31st March 2020, HDFC Bank constitutes 10.42% of NIFTY. NIFTY Index Fund would contains 10.42% of HDFC Bank shares. Similary INFY constitutes 6.56% of NIFTY. NIFTY Index Fund would contains 6.56% of INFY shares  In simple terms, index fund would track the performance of an index.

What are various types in Index Funds?


There are 3 major types of Index 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.

In this article we would focus only on NIFTY / SENSEX Index Funds.

Top 5 Best Index Mutual Funds to invest to beat corona virus situation


Here is the list of Best Index Funds to invest now.

#1 – Aditya Birla Sun Life Index Fund

#2 – HDFC Index Fund – Sensex Plan

#3 – HDFC Index Fund Nifty 50 Plan

#4 – ICICI Prudential Nifty Index Fund

#5 – UTI Nifty Index Fund – Regular Plan

Top 5 Best Index Funds to invest to in 2020 – Detailed View


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

#1 – Aditya Birla Sun Life Index Fund


Investment Strategy of the Index Fund

The mutual fund aims to generate returns that are commensurate with the performance of the Nifty subject to tracking error, through investments in companies whose securities included in Nifty and in money market instruments & cash.

Past Performance, Ratios and Risk Measures of this index Fund

FundAditya Birla Sun Life Index Fund
Returns in 1mth-2.2%
Returns in 3mth-26.7%
Returns in 1 year-22.9%
Annualised Returns in 3 years-0.2%
Annualised Returns in 5 years0.8%
Annualised Returns in 10 years5.5%
Exp Ratio0.58%
Net Assets (AUM) Rs Crs143
1 Lakh invested 3 years back is now0.99 Lakhs
1 Lakh invested 5 years back is now1.04 Lakhs
1 Lakh invested 10 years back is now1.7 Lakhs
Standard Deviation18.52
Sharpe Ratio-0.30
Sortino Ratio-0.30
Beta0.99
Alpha-0.22

#2 – 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.

Past Performance, Ratios and Risk Measures of this index Fund

FundHDFC Index Fund - Sensex Plan
Returns in 1mth0.0%
Returns in 3mth-27.1%
Returns in 1 year-21.7%
Annualised Returns in 3 years1.9%
Annualised Returns in 5 years2.3%
Annualised Returns in 10 years6.4%
Exp Ratio0.30%
Net Assets (AUM) Rs Crs957
1 Lakh invested 3 years back is now1.06 Lakhs
1 Lakh invested 5 years back is now1.12 Lakhs
1 Lakh invested 10 years back is now1.86 Lakhs
Standard Deviation18.83
Sharpe Ratio-0.17
Sortino Ratio-0.16
Beta1.00
Alpha2.22

#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.

Past Performance, Ratios and Risk Measures of this index Fund

FundHDFC Index Fund Nifty 50 Plan
Returns in 1mth-2.4%
Returns in 3mth-27.3%
Returns in 1 year-23.3%
Annualised Returns in 3 years0.2%
Annualised Returns in 5 years1.5%
Annualised Returns in 10 years6.0%
Exp Ratio0.30%
Net Assets (AUM) Rs Crs1,208
1 Lakh invested 3 years back is now1.01 Lakhs
1 Lakh invested 5 years back is now1.08 Lakhs
1 Lakh invested 10 years back is now1.79 Lakhs
Standard Deviation18.84
Sharpe Ratio-0.26
Sortino Ratio-0.27
Beta1.01
Alpha0.43

#4 – 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 the index.

Past Performance, Ratios and Risk Measures of this index Fund

FundICICI Prudential Nifty Index Fund
Returns in 1mth-2.1%
Returns in 3mth-27.0%
Returns in 1 year-23.0%
Annualised Returns in 3 years-0.2%
Annualised Returns in 5 years1.1%
Annualised Returns in 10 years6.1%
Exp Ratio0.45%
Net Assets (AUM) Rs Crs688
1 Lakh invested 3 years back is now1 Lakhs
1 Lakh invested 5 years back is now1.06 Lakhs
1 Lakh invested 10 years back is now1.8 Lakhs
Standard Deviation18.72
Sharpe Ratio-0.29
Sortino Ratio-0.29
Beta1.00
Alpha-0.06

#5 – 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.

Past Performance, Ratios and Risk Measures of this index Fund

FundUTI Nifty Index Fund - Regular Plan
Returns in 1mth-2.3%
Returns in 3mth-27.3%
Returns in 1 year-23.1%
Annualised Returns in 3 years0.4%
Annualised Returns in 5 years1.6%
Annualised Returns in 10 years6.1%
Exp Ratio0.17%
Net Assets (AUM) Rs Crs1,729
1 Lakh invested 3 years back is now1.01 Lakhs
1 Lakh invested 5 years back is now1.08 Lakhs
1 Lakh invested 10 years back is now1.8 Lakhs
Standard Deviation18.83
Sharpe Ratio-0.26
Sortino Ratio-0.26
Beta1.01
Alpha0.56

Why you need to invest in Index Mutual Funds?


Here are some pros of investing in these funds.

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

2) Low Expense Ratio: Many mutual fund schemes has 1.5% to 2.5% management cost (expense ratio). Since index mutual funds invest in the replica of the Index composition, there is less management, cost and comes with lower expense ratios. The expense ratios range between 0.3% to 1.5%. The funds we have selected have 0.17% to 0.58% expense ratios only.

3) No Fund Manager mistakes: 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 composition.

Negative Factors of investing in Index Mutual Funds


Here are some negative / risk factors of investing in Index Funds.

1) Cannot avoid poor performing stocks – Index Funds invest in the underlying stocks of the Index. If some of the companies in the Index have poor performance, fund manager cannot ignore them. They are forced to invest in such poor performance companies too.

2) Cannot invest in Multibaggers: Index fund has no scope to invest in companies where there is huge potential and would fall in midcap or smallcap segment. Some of the best midcap mutual funds or top performing smallcap mutual funds indicated by us earlier has such scope of investing in multi-bagger stocks.

3) Expensive Valuations, still need to invest – Some companies share price might be available at expensive valuations, but fund manager has no choice except to invest in them. The fund manager has to compromise on returns from such highly expensive stocks.

List of these Index Mutual Funds for 2020 along with performance


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Suresh KP

Top 5 Best Index Mutual Funds to invest now in 2020 to beat corona virus situation

Suresh KP

I have done my Post Graduation in Finance. I have over 20 years of experience in analyzing various investment options and money saving ideas. I love doing financial planning, Mutual Fund Analysis, Searching long term Stocks for wealth creation, IPO Reviews, Analyzing Life Insurance and Health insurance Plans etc.

6 Comments

  • Hi Suresh,

    I have below doubts

    With the current market condition do you recommend to go with lumsum or SIP for 10-15 yrs on Index MF ?

    Secondly, I can see one more of your post on Index MF from Nov 2019 and get confused with the returns, as for the same MF the returns for 1, 3, 5, 10 yrs are showing different. Could you please clarify as may be my inexperience eyes not able to find the difference.

    Thanks in anticipation.

    • Since markets are still lower than before covid-19 levels, you can go for lumpsum also now. Regd your other question, returns are always annualised and compared point in time. e.g. Till Nov-19 if the annualised returns are 15% for the last 5 years, now the situation has changed. Due to market downfall the returns in the last 6 months would have got erased and you might see very low returns.

  • Thank you. Good open Guidance

  • Dear Sir,
    I have been investing below mutual funds through SIP last 5 years.

    Aditya birla sunlife mc fund growth regular plan
    Aditya birla sunlife pure value fund growth regular plan
    Canada rebocco emerging equities regular growth
    DsP small cap fund growth
    Franklin india focused equity fund growth
    Franklin india smaller companies fund dividend
    HdFC midcap opportunities fund regular plan growth
    Kotaku emerging equity scheme growth regular plan

    Can you please provide yr valuable advice that these funds I can continue even after the present situation. Some funds went negative will recover after 2 to 3 years in long term scenario.

    Expecting your reply.

    • Hello Jayadevan, Good to hear about you. Your portfolio is highly concentrated in high risk funds from value category, MNC category, midcap and smallcap segment. Unless you are very high risk investor, you should not have too many such funds in your portfolio. If you are moderate to high risk investors, I would advice you to have 3 funds each from midcap and smallcap and add 2-3 funds from largecap or multicap segment. Under current situation, don’t expect any returns in the next 2 years unless you are investing any fresh investments now.

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