Investing in the stock market can be a daunting task, especially for those who are new to the world of finance. Index funds have become an increasingly popular choice for long-term investors, as they provide exposure to a broad range of stocks at a relatively low cost. With so many options available, it can be challenging to know which index funds to invest in. In this article, we have selected the Best Index Funds for long-term investing based on a low expense ratio of the fund and with considerable AUM. Investors can invest in these index-funds based on their risk appetite and financial goals.
Also Read: 5 Star Rated Crisil Mutual Funds to invest in 2023
How we filtered these Best Index Funds for Long Term Investing?
We have considered all direct plans of equity funds. There are around 690 odd mutual funds based on this which includes index funds and active funds.
Further filtered all index funds from this list. We could get around 97 mutual funds.
We have further filtered funds from specific index like Nifty 50, Sensex, Nifty Next 50, Midcap 150, Smallcap 250 and Nasdaq 100.
We have removed specific indexes like Nifty 100, Midcap 50/100 or Smallcap 50/100, momentum index, all sector indexes, Nifty 100 quality 30 index, etc.
From each such selected index category, we have filtered 2 mutual funds that have low expense ratios.
Further filter done where the AUM is at least Rs 100 Crores.
All data source is from ValueResearch and moneycontrol. The returns computed as of 16-April-2023.
12 Best Index Mutual Funds for Long Term Investing in 2023
#1 – Best Nifty 50 Index Fund to invest
The Nifty 50 index is a well-diversified 50 companies index reflecting overall market conditions. Nifty 50 Index is computed using free float market capitalization method.
Performance of Nifty 50 Index
Here are the total annualised returns of this index.
Last 1 Year – 0.6%
Last 5 Years – 12.75%
Last 10 Years – 11.9%
Since inception – 11%
Top Index Funds to invest
Here is the list of 2 mutual funds from this index with low expense ratio + AUM above Rs 100 Crores.
| Funds | Exp Ratio % | AUM |
|---|---|---|
| Navi Nifty 50 Index Fund | 0.06 | 722 |
| Bandhan Nifty 50 Index Fund | 0.10 | 678 |
Who can invest in these Nifty 50 Index Funds?
Nifty 50 index is consistent performer in the medium to long term. Investing through SIP or in multiple lump sums at period interval is a good idea to maximise returns. If you are moderate to high risk investor and willing to invest for 5 years and above, then you can invest in these funds.
#2 – Best Sensex Index Fund to invest
These funds would invest in 30 stocks which are part of Sensex.
Performance of Sensex Index
Here are the total annualised returns of this index.
Last 1 Year – 5.7%
Last 5 Years – 11.9%
Last 10 Years – 11.97%
Top Sensex Index Funds to invest
Here is the list of 2 mutual funds from this index with low expense ratio + AUM above Rs 100 Crores.
| Funds | Exp Ratio % | AUM |
|---|---|---|
| ICICI Prudential S&P BSE Sensex Index Fund | 0.16 | 896 |
| UTI S&P BSE Sensex Index Fund | 0.20 | 158 |
Who can invest in these Sensex Index Funds?
Sensex index fund invests in 30 underlying stocks and is a consistent performer in the medium to long term. While some experts say Nifty index have 50 stocks that have greater diversification compared to Sensex. I feel that You don’t need to invest in both Nifty50 index and Sensex Index Fund, but can choose one of them. Again, investing through SIP or in multiple lump sums at period intervals can help to maximise returns. If you are moderate to high risk investor and willing to invest for 5 years and above, then you can invest in such Sensex funds.
You may like: Five Equity Funds 1 Year Return up to 24%
#3 – Best Nifty Next 50 Index Fund to invest
The Nifty Next 50 Index represents 50 companies from the Nifty 100 after excluding the Nifty 50 companies.
Performance of Nifty Next 50 Index
Here are the total annualised returns of this index.
Last 1 Year – minus 7.3%
Last 5 Years – 6.8%
Since inception – 14.7%
Top Nifty Next 50 Index Funds to invest
Here is the list of 2 mutual funds from this index with low expense ratio + AUM above Rs 100 Crores.
| Funds | Exp Ratio % | AUM |
|---|---|---|
| HDFC NIFTY Next 50 Index Fund | 0.30 | 345 |
| ICICI Prudential Nifty Next 50 Index Fund | 0.30 | 2,477 |
Who can invest in these Nifty Next 50 Index Funds?
Nifty Next 50 index was a consistent performer in the medium to long term. However, the party was spoiled with several reasons. There were several new age companies that have entered into this index and there was a crash in their stock prices (e.g. Zomato, Nykaa etc.,). Even crash in Adani Group of stocks (AWL, Adani Green and Adani Transmission) etc., has ruined the index performance. Personally, I am not in favor of investing in this index. However, if investors believe this index could do better in coming years, they can invest in these funds.
#4 – Best Midcap 150 Index Fund to invest
Nifty Midcap 150 represents the next 150 companies (companies ranked 101-250) based on full market capitalisation from the Nifty 500.
This index is intended to measure the performance of mid market capitalisation companies.
Performance of Nifty Midcap 150 Index
Here are the total annualised returns of this index.
Last 1 Year – 2.7%
Last 5 Years – 12.5%
Since inception – 15.8%
Top Midcap 150 Index Funds to invest
Here is the list of 2 mutual funds from this index with low expense ratio + AUM above Rs 100 Crores.
| Funds | Exp Ratio % | AUM |
|---|---|---|
| ICICI Prudential Nifty Midcap 150 Index Fund | 0.20 | 108 |
| Nippon India Nifty Midcap 150 Index Fund | 0.20 | 584 |
Who can invest in these Midcap 150 Index Funds?
This midcap index contains 150 midcap companies. Midcap stocks are riskier compared to large cap stocks. Indian stock markets underperformed in the last 1.5 years which is reflected with low returns in the last 5 years in this index. If you are a high risk investor and willing to invest for 8 to 10 years and above, then you can invest in these funds. These are high risk high return mutual funds.
#5 – Best Nifty Small Cap 250 Index Fund to invest
Nifty Smallcap 250 represents the balance 250 companies (companies ranked 251-500) from the Nifty 500.
Performance of Nifty Small Cap 250 Index
Here are the total annualised returns of this index.
Last 1 Year – minus 6%
Last 5 Years – 8%
Since inception – 14%
Top Nifty Small Cap 250 Index Fund
Here is the list of 2 mutual funds from this index with low expense ratio + AUM above Rs 100 Crores.
| Funds | Exp Ratio % | AUM |
|---|---|---|
| Nippon India Nifty Smallcap 250 Index Fund | 0.30 | 392 |
| Motilal Oswal Nifty Smallcap 250 Index Fund | 0.31 | 315 |
Who can invest in these Nifty Small Cap 250 Index Funds?
This smallcap index contains 250 smallcap companies. Small cap stocks are riskier compared to mid cap and large cap stocks. Again, due to underperformance in overall Indian stock markets you could see low returns in the last 5 years in this small cap index. If you are a high risk investor and willing to invest for 8 to 10 years and above, then you can invest in these small cap index funds. Even these are high risk high return funds.
Also Read: 5 Mutual Funds with Highest Returns in last 10 years
#6 – Best Nasdaq 100 Index Fund to invest
The Nasdaq-100 is a stock market index made up of 101 equity securities issued in 100 of the largest non-financial companies listed on the Nasdaq stock exchange. It is a modified capitalization-weighted index.
Performance of Nasdaq 100 Index
Here are the total annualised returns of this index.
Last 1 Year – minus 6%
Last 5 Years – 14.4%
Last 10 Years – 16%
Top Nasdaq 100 Index Funds to invest
We could filter 2 funds under this category too which has high AUM and a low expense ratio.
| Funds | Exp Ratio % | AUM |
|---|---|---|
| Motilal Oswal Nasdaq 100 FOF | 0.10 | 3,607 |
| Navi NASDAQ 100 FoF | 0.13 | 517 |
Who can invest in these Nasdaq 100 Index Fund?
Many critics say that Nasdaq 100 index has 100 companies which are majorly technology related. Downfall in technology related stocks in the last 1 year is the major negative point. However, this could be temporary and we expect that this index would bounce back and outperform in the next 5 to 10 years. High risk investors who are willing to invest 5 years and above and looking to take global exposure in their mutual fund portfolio can invest in such index funds.
Note: Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
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I am doing SIP investing in Index ETFs.
Do you recommend Index ETFs or MFs?
This depends on how you look. e.g. I don’t want to do trading. But I keep a SIP or lumpsum at the end of the day. Some people say there could be fluctuations during the day and they want to buy during huge falls which might recover by the end of the day. You can check this article about the difference. Link here