Index Funds for Nifty 50: Which One Should You Choose?

The Nifty 50 is a list of 50 Indian companies, calculated by NSE Indices.^[1] Picture a basket that holds these 50 companies.

• The biggest companies weigh the most: as of 30 October 2026, HDFC Bank makes up 9.95% of the Nifty 50, ICICI Bank 9.39% and Reliance Industries 7.30%.^{[1] [8] [9] [10]}
• Example: out of ₹1,00,000 put in a Nifty 50 fund, about ₹9,950 goes to HDFC Bank, and ₹2,400 to Bajaj Finance (2.40% of the index).^{[1] [11]}
• Finance dominates: financial services make up 37.13% of the Nifty 50.^[1]
• The index is reviewed twice a year: NSE Indices looks at the six months ending 31 January and 31 July.^[1]
• The Nifty 50 started at 1,000 points on 3 November 1995.^[1] You can follow its price on Yahoo Finance.^[6]

An index fund for Nifty 50 is a fund that copies the Nifty 50 instead of picking its own shares.^[3]

• The rule from SEBI (Securities and Exchange Board of India), the Indian stock market regulator: an index fund must put at least 95% of its money in the shares of the index it copies.^[2] So out of ₹1,00,000, at least ₹95,000 goes into the 50 companies of the Nifty 50.
• Same shares, same weights: the fund buys the shares of the index in the same proportions, and changes its basket when the index changes.^[3]
• Lower fees: no fund manager picks the shares, so the fund costs less than a managed fund.^[3]
• Index fund or ETF: a Nifty 50 ETF copies the same index, but you buy it on the stock exchange like a share. Example: the Nippon India ETF Nifty 50 BeES is listed on the NSE under the code NIFTYBEES.^[5] To buy an ETF, you need a demat account (an account that holds your shares) and a trading account.^[7]

Since it started, the Nifty 50 has earned 12.15% a year on average, dividends included, according to NSE Indices as of 30 October 2026.^[1] Dividends are the part of their profits that companies pay to their shareholders. An index fund earns a little less, because of its fees.

• Example: ₹1,00,000 invested at 12% a year for 20 years grows to about ₹9,65,000 (almost 9.6 times what you put in). This is an example, not a promise.
• Over 5 years, the gain is lower: 6.70% a year on average, dividends included.^[1]
• Some years are bad: over the year to 30 October 2026, the Nifty 50 lost 9.45%, dividends included.^[1] ₹1,00,000 would have become about ₹90,550.
• Time smooths out the falls: the longer you keep your fund, the less one bad year weighs on your result.

The best index fund for Nifty 50 is the one that costs you the least: they all copy the same 50 companies. Check these 4 points, in this order.

• The direct plan: you buy the fund from the fund house, with no middleman, so with no commission.^[3] The regular plan goes through a middleman (broker, adviser or distributor) and costs more.^[3]
• The growth option: the gains stay in the fund and raise its value, instead of being paid out to you.^[3] Example: if your fund earns ₹10,000 in the year, that ₹10,000 stays invested and earns more in turn. "Direct growth" in a fund's name means direct plan and growth option.
• The yearly fees: in SEBI's example, ₹1,00,000 invested at 10% a year earns 9.5% with 0.5% in fees, and 8.5% with 1.5% in fees.^[4] Over 10 years, your ₹1,00,000 grows to about ₹2,47,800 in the first case, against ₹2,26,100 in the second.
• The tracking error: the fund doesn't go up and down by exactly the same percentage as the Nifty 50.^[7] The smaller this gap, the better the fund copies the index.

A SIP (Systematic Investment Plan) is an automatic payment every month or every quarter. You can buy an index fund for Nifty 50 on the fund house's website or app, or through a distributor registered with AMFI (Association of Mutual Funds in India), the association of mutual funds in India.^{[3] [7]} For the direct plan, go through the fund house.

An index fund can't beat the Nifty 50: it copies it, minus its fees. A few funds tracked by Donnie did better than the Nifty 50 over 7 years. These are funds that invest notably in emerging markets.

• Skyline Umbrella Fund ICAV - ARGA Emerging Market Equity Fund A USD Acc earned +18.4% a year over 7 years, against +5.5% for the Nifty 50.
• Example: $1,000 invested 7 years ago would be worth $3,265 in Skyline Umbrella Fund ICAV - ARGA Emerging Market Equity Fund A USD Acc, against $1,455 in the Nifty 50.
• Schroder International Selection Fund Frontier Markets Equity I Accumulation USD earned +15.2% a year: compare its curve in the tool.
• Eaton Vance Emerging and Frontier Countries Equity Fund Class I earned +13.7% a year: compare its curve in the tool.

Three mistakes cost a lot: taking the regular plan without knowing it, buying two Nifty 50 funds, and stopping your SIP during a fall.

• Taking the regular plan without knowing it: with 1% more in fees a year, ₹1,00,000 invested for 10 years is worth about ₹21,700 less (calculated from SEBI's example: 10% a year, 1.5% in fees against 0.5%).^[4]
• Buying two Nifty 50 funds: both hold the same 50 companies.^[3] You pay fees twice for the same basket.
• Stopping your SIP during a fall: you sell or stop buying just when the fund's units are cheaper. Example: if a unit is worth ₹100, your ₹5,000 for the month buys 50 of them; if it drops to ₹90, your ₹5,000 buys about 55.