Best Index Funds to Invest in India

If you want a straightforward way to build wealth in India, it’s tough to beat index funds. Instead of chasing the latest hot stock or trying to outsmart the market, you just match the performance of a major index, like the Nifty 50, Nifty Next 50, Midcap, Smallcap, or even global heavyweights like the S&P 500.

The funds we are about to cover in this article give you a solid, well-rounded mix. A practical index fund portfolio usually starts with a core holding in large caps or the Nifty Next 50, then branches out with mid caps, small caps, equal-weight funds, and some global picks.

First, let’s clear up what an index fund actually is.

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What’s an index fund?

An index fund isn’t complicated. It just copies a specific market index, like the Nifty 50, Nifty Midcap 150, Nifty Smallcap 250, or S&P 500, by holding the same stocks in similar proportions. No one’s picking winners or losers here.

This approach means you get lower costs (because the fund doesn’t need a big team picking stocks), instant diversification, and it gives returns that are similar to the index, with a tiny tracking error.

If you want something simple, transparent, and cheap for the long haul, index funds fit the bill.

Motilal Oswal Nifty Midcap 150 Index Fund

This fund tracks the Nifty Midcap 150 Index, which includes companies ranked roughly between 101 and 250 by market capitalisation on the NSE. These businesses sit in the growth phase, larger than small caps but still expanding faster than established large caps.

Launched in September 2019, the fund has built an AUM of over ₹2,900 crore. It carries a regular plan TER of around 1% and has delivered a strong 5-year CAGR of about 23%. Around 95–100% of the portfolio remains invested in index constituents, with a small allocation to debt or money-market instruments for liquidity.

Motilal Oswal Nifty Small Cap 250 Index Fund

Here, you get exposure to the Nifty Smallcap 250 Index, 250 small companies outside the top 500. There’s big growth potential, but also more ups and downs. This fund also started in September 2019 and manages just over ₹1,000 crore. The expense ratio is roughly 1.04%, and the 5-year CAGR is around 22%. It makes sense if you’re ready to hold for 7–10 years and can handle a bumpy ride.

Nippon India Nifty Small Cap 250 Index Fund

This one tracks the same Nifty Smallcap 250 Index, just from a different fund house. It launched in October 2020, and its AUM has reached ₹2,650 crore as of now. The expense ratio is a bit lower at 0.95%, and performance is nearly identical, a 5-year CAGR close to 22%.

DSP Nifty 50 Equal Weight Index Fund

Most Nifty 50 funds load up on the biggest companies, but not this one. The DSP Nifty 50 Equal Weight Index Fund gives every stock about a 2% slice of the pie. Since its launch in October 2017, it has built an AUM of around ₹2,400 crore, with a 0.96% expense ratio. The 5-year CAGR sits at roughly 18.6%. By not leaning too hard on the big names, this fund offers better diversification, though you might see a bit more volatility.

Motilal Oswal S&P 500 Index Fund

This fund lets you invest in the S&P 500, so you own a piece of giants like Apple, Microsoft, Amazon, and NVIDIA. Started in April 2020, it manages about ₹4,100 crore. The expense ratio is 1.14%. Over five years, it’s delivered a CAGR of around 17.8%. Returns here move with both the US stock market and the rupee-dollar exchange rate, making it a great tool for diversifying globally.

ICICI Prudential Nifty Next 50 Index Fund

This one tracks the Nifty Next 50 Index, the next batch of large caps, basically the companies right below the Nifty 50, and often tomorrow’s leaders. Launched way back in June 2010, this is the oldest and biggest fund in the segment, with an AUM of about ₹8,150 crore. The expense ratio is just 0.68%, and the 5-year CAGR is around 16.5%. Its long track record and size bring a lot of comfort to investors.

UTI Nifty Next 50 Index Fund

UTI’s fund also sticks to the Nifty Next 50 Index, giving you the same exposure to up-and-coming large caps. Launched in June 2018, it manages around ₹5,960 crore. The expense ratio is 0.79%, and its 5-year CAGR is close to 16.5%. In short, these index funds cover almost every corner of the market: large, mid, small, and equal-weight.

DSP Nifty Next 50 Index Fund

This fund sticks to the Nifty Next 50 Index, putting the spotlight on companies with more room to grow than the usual Nifty 50 giants. It’s a relatively new player, launched in February 2019, and it’s not huge; assets under management sit at about ₹1,130 crore. But the expense ratio is low, around 0.67%. Over five years, it’s pulled off a CAGR of roughly 16.7%, which matches up well with the index.

Motilal Oswal Nifty 500 Index Fund

This fund mirrors the Nifty 500 Index, covering the top 500 listed companies in India and representing over 90% of total market capitalisation. Launched in September 2019, it has an AUM of about ₹2,750 crore, a TER of around 0.88%, and a 5-year CAGR close to 16%. Its biggest advantage is simplicity—it works as a one-fund India equity solution, automatically spreading investments across large, mid and small caps in market-cap proportions.

Conclusion

To conclude, choosing the best index fund is about keeping things simple and staying disciplined. A well-chosen index fund gives you broad market exposure, low costs and the ability to participate in long-term economic growth without the stress of frequent decisions. If you stay invested through market cycles and allow compounding to do its job, an index fund can quietly become one of the most reliable pillars of your investment portfolio.