Best Index Funds in India 2025: Nifty 50 vs Nifty Next 50 vs Midcap 150
Index funds are the most powerful investment tool available to the Indian retail investor — low cost, diversified, and backed by decades of data showing they outperform 80–90% of actively managed funds over long periods. But which index should you track? This guide breaks down the three most important options with real numbers.
What Is an Index Fund — and Why Does It Beat Most Fund Managers?
An index fund is a mutual fund that simply replicates a market index — like the Nifty 50 — by buying the same stocks in the same proportions as the index itself. There's no fund manager trying to "beat" the market. The fund just is the market.
Why does this matter? Because most actively managed funds underperform their benchmark index over the long run, especially after accounting for expense ratios of 1–2%. Index funds, by contrast, have expense ratios as low as 0.04–0.20%, and their performance is directly tied to India's economic growth.
Warren Buffett himself has famously recommended index funds for most investors. In India, market legend Rakesh Jhunjhunwala was a proponent of index investing for people who don't want to study individual stocks.
The Three Main Index Options Compared
Nifty 50
Nifty Next 50
Nifty Midcap 150
*Returns are approximate historical CAGR. Past performance does not guarantee future results.
Best Nifty 50 Index Funds in India (2025)
Top Nifty 50 Index Funds — Ranked by Expense Ratio
| Fund Name | Expense Ratio | 1-yr Return* | Min. SIP |
|---|---|---|---|
| UTI Nifty 50 Index FundOur Pick | 0.10% | ~14.2% | ₹500 |
| HDFC Index Fund – Nifty 50 Plan | 0.20% | ~14.0% | ₹500 |
| Nippon India Index Fund – Nifty 50 | 0.20% | ~13.9% | ₹100 |
| ICICI Prudential Nifty 50 Index Fund | 0.17% | ~14.1% | ₹100 |
| Axis Nifty 50 Index Fund | 0.17% | ~14.0% | ₹500 |
ⓘ Why expense ratio matters so much: The difference between 0.10% and 1.5% expense ratio on a ₹10 lakh portfolio is ₹14,000 per year — money that stays invested and compounds for you with the cheaper fund. Over 20 years, this gap can amount to lakhs.
Best Nifty Next 50 Index Funds
Top Nifty Next 50 Index Funds
| Fund Name | Expense Ratio | 1-yr Return* | Min. SIP |
|---|---|---|---|
| UTI Nifty Next 50 Index FundOur Pick | 0.30% | ~16.8% | ₹500 |
| HDFC Nifty Next 50 Index Fund | 0.30% | ~16.5% | ₹500 |
| Nippon India ETF Nifty Next 50 | 0.20% | ~16.9% | 1 unit |
Best Midcap Index Funds
Top Midcap 150 Index Funds
| Fund Name | Expense Ratio | 1-yr Return* | Min. SIP |
|---|---|---|---|
| Motilal Oswal Nifty Midcap 150 IndexOur Pick | 0.30% | ~21.4% | ₹500 |
| Nippon India Nifty Midcap 150 Index | 0.30% | ~21.2% | ₹100 |
| UTI Nifty Midcap 150 Index Fund | 0.35% | ~21.0% | ₹500 |
*1-year returns are approximate and change daily. Always check current returns on AMFI or the fund's official page before investing.
Recommended Portfolios: Mix by Risk Profile
Conservative Portfolio (Low Risk)
Best for: New Investors, Short HorizonBalanced Portfolio (Medium Risk)
Best for: 5–10 Year HorizonAggressive Portfolio (High Growth)
Best for: 10+ Year Horizon, Young InvestorsCommon Index Fund Mistakes to Avoid
Mistake 1: Picking the Fund with the Highest 1-Year Return
Index funds tracking the same index should deliver almost identical returns. If one fund shows dramatically higher 1-year returns, check the data — it may include periods of exceptional market performance that won't repeat. Always compare expense ratios first, then tracking error.
Mistake 2: Investing in Regular Plans Instead of Direct Plans
Every mutual fund has a Regular plan (sold through brokers who earn commission) and a Direct plan (bought directly, lower expense ratio). Always choose Direct plans — the expense ratio difference of 0.5–1% compiles to lakhs over 15–20 years.
Mistake 3: Checking Portfolio Value Daily
Index funds work over years, not days. Watching daily NAV fluctuations causes panic and poor decisions. Set a quarterly review schedule and close the app between reviews.
How to Get Started This Week
- Open Groww or Zerodha Coin: Both offer Direct plans of all index funds mentioned above. Complete your KYC (15 minutes).
- Search "UTI Nifty 50 Index Fund - Direct Plan": Verify the expense ratio is 0.10%. Start a SIP of whatever amount you can afford — even ₹500.
- Set your SIP date: Choose the 5th of each month — right after most salary credits. Enable auto-debit.
- Review quarterly, not daily: Set a calendar reminder for Jan, Apr, Jul, Oct. Check your portfolio then and nowhere else.
Index fund investing is the single most reliable strategy for long-term wealth creation available to Indian retail investors. It requires no skill, minimal time, costs almost nothing, and historically delivers returns that beat most professional fund managers. Start simple, stay consistent, and let India's economic growth do the work for you.
Disclaimer: All return figures are historical and indicative only. Mutual fund investments are subject to market risks. Please read all scheme-related documents before investing. This is not personalised financial advice.