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Invest | What are the Index Funds and Best Index Funds to Invest in 2023?

What are the Index Funds and Best Index Funds to Invest in 2023?

What are the Index Funds

Index Funds are mutual fund programs whose portfolios are built employing an economic index as a foundation. In simple terms, a benchmark fund's success is reliant on its handling of a certain index. These systems are administered invisibly. Similar to how shares are distributed among an index, these funds include shares.

Mutual funds called "Index Funds" invest in a certain index. Their main objective when it comes to stocks is to imitate the index of the equity market. A handful of India's Best Index Fund with the greatest AUMs invest in the same equities and with the identical weighting as the index that underlies them.

This is only being done for information. This is not a suggestion to look at the largest AUMs before making an investment. Please think about your risk appetite and investment goals before making any purchases.  In this article, we will discuss the best index fund to in, so let's start!

Index Fund Investing

A group of companies known as an index fund tries to replicate the efficacy of a popular stock market index, such as the Standard & Poor's 500 index. A market index provides insight into the state of the economy as a whole and is composed of businesses that represent a certain sector of the stock market.

The assets invested in an index fund will be identical to those in the market index it monitors. With no need for active management, the performance of the index fund often closely resembles that of the index.

What is an Index Fund?

An important component of a successful investing strategy is variation. Investors aim to distribute their money over a variety of asset types, including gold, real estate, debt, and equities. To reduce risks, they work to further diversify even within each asset class. By purchasing shares of firms with various market caps and industries, you may diversify your stock portfolio, a well-known strategy for lowering risks in equity investment.

An index mutual fund, as its name implies, makes investments in equities that mimic market indices like the NSE Nifty, BSE Sensex, etc. The funds in this category are administered passively, indicating that the management doesn't alter the investment portfolio's composition and instead invests in the same assets that are contained in the underlying index in the same proportion. These types of funds aim to provide returns that are equivalent to the indexes they follow.

How to Invest in Index funds?

Are you interested in purchasing index funds in India but have doubts about making investments in index funds? If so, we have this covered for you. Both online and offline methods of investing in index funds are covered in this section. Here we are describing the process of it:

Online Procedure

  • First, you have to open a Demat account by taking the assistance of any website.
  • Complete your KYC requirements and go to the next level if you haven't previously.
  • Enter the pertinent data as per requirement.
  • Select the investment option or funds you wish to invest in based on your objectives in life.
  • Select the appropriate fund, then make the necessary transfer.
  • If you wish to make monthly investments through a SIP (systematic investment plan), you may also set up a standing instruction with your bank.

Offline Procedure

  • Completely and properly fill out both the application and KYC forms before submitting them.
  • As required, include and input the relevant data.
  • Choose the investment or securities you desire based on your level of financial capacity.
  • Use the way you like to pay the amount that you invested.
  • Set up BillPay, eMandate, eNACH, ADF (Auto Debit Form), or OTM (One Time Mandate) digitally or physically if you wish to make monthly SIP investments.

How do Index Funds Work?

Index funds don't strive to outperform the market or generate better returns than average. Instead, the funds in question attempt to mimic the performance of the market by purchasing the shares of each company represented on a market index.

Because it is not necessary to actively choose which securities to acquire or sell, index funds are regarded as a passive ownership method. Since market fluctuations are often less volatile across an index than they are for individual equities, investors frequently utilize index funds to help manage risk in their portfolios.

Best index funds for 2023

S.No.Name of CompanyAUMMin. InvestCurrent ValueReturn (P.A.)
1Nippon India Index S&P BSE SensexRs. 477 CrsRs. 500Rs. 8.95 Lakhs+16.02% p.a.
2HDFC Index S&P BSE Sensex Direct Plan-GrowthRs. 5,071 Crs.Rs. 300Rs. 8.94 lakhs+15.97% p.a.
3Bandhan Nifty 50 Index Fund Direct Plan-GrowthRs. 808 Crs.Rs 100Rs. 8.94 Lakhs+15.96% p.a.
4.UTI Nifty 50 Index FundRs. 11,586 CrsRs. 500Rs. 8.91 Lakhs+15.82% p.a.
5.ICICI Prudential Nifty 50 Index FundRs. 4,822 Crs.Rs. 105Rs. 8.9 Lakh+15.79%
6Tata Nifty 50 Index FundRs. 455 CrsRs. 500Rs. 8.89 Lakh+15.76%
7Tata S&P BSE Sensex Index FundRs. 250 CrsRs. 500Rs. 8.89 Lakh+15.76%
8Nippon India Index Nifty 50 Rs.943 Crs   Rs. 500  Rs. 8.89 Lakhs+15.74%
9HDFC Index Fund Nifty 50 PlanRs. 8,973 Crs.Rs. 100Rs. 8.89 Lakhs+15.74%
10SBI Nifty Index FundRs. 4,596 Crs.Rs. 500Rs. 8.87 Lakhs+15.67%
11Aditya Birla Sun Life Nifty 50 Index FundRs. 615 CrsRs. 105Rs. 8.85 Lakhs+15.54%
12Franklin India NSE Nifty 50 IndexRs. 537 Crs.Rs. 500Rs. 8.84 Lakhs+15.52%

Important Things to Think About Before Dealing in the Best Index mutual fund investments for 2023

Before purchasing the best index funds, you should take the following factors into account:

1.    Active Administration

A kind of passive mutual fund is an index fund. Mutual funds that do not actively involve fund management are referred to as dormant funds. Index As previously reported, fund managers aim to mimic an index's record; however, they have no control over which businesses enter or leave the fund, or how much of the fund's capital is put away in which stock.

2.    Returns

The goal of fund executives is not to beat the benchmark or outperform the alpha, as it is known in the world of stocks. Instead, the investment company administrator here tries to copy it.

Due to the fund's expenses, its earnings are often equal to or slightly below the Index Return. As a result, the majority of India's Top Index Funds will have values that are almost exact replicas of the index of reference they are monitoring.

Read Also:- Secure Your Golden Years with Individual Retirement Account (IRA)

Advantages of investing in Index funds

Listed below are some benefits that index funds enjoy:

1.    Affordable prices

An effective staff of research analysts is not necessary to assist fund managers in selecting the best companies because an index fund mirrors its underlying benchmark. Additionally, there is no stock trading going on. All of these elements contribute to an index fund's reduced management costs.

2.    Impartial investing

Index funds invest via an automated, law-based process. The amount to be invested in index funds of different securities is specified in the fund manager's mandate. By doing this, human judgment or prejudice in making choices regarding investments is eliminated.

3.    Extensive market awareness

To guarantee that the investment strategy has diversification across all industries and stocks investments should be made in a ratio that is comparable to that of an index. As a result, an investor may use just one index fund to capture the likely profits on the broader sector of the market. If you choose to invest in the Nifty index fund, for example, you would have access to 50 securities distributed over 13 different industries, from pharmaceuticals to banking and finance.

4.    Tax Advantages of Index Fund Investments

Due to their passive management, index funds often have a little turnover or few trades made by an investor in a given year. Less trading means that the unitholders receive fewer capital gains dividends.

5.    Quicker to control

Index funds are simpler to handle things since investors and managers don't have to worry about how the marketplace is treating the stocks that make up the index. All an investment advisor needs to do is regularly rebalance his or her portfolio.



This was the ranking of India's best-friendly index funds for 2023. The best Index mutual funds are passive mutual funds that aim to increase investor wealth by imitating an index's performance. As a result, index funds could have lower risk than funds that are actively managed. These investments help to evenly distribute risk across your portfolio. Even if index funds represent a certain index, one shouldn't invest indiscriminately in the top index funds. Rather, do some research to find out if these funds are a suitable fit for your portfolio and how much money you should put into them.


Q.1 What are index funds?

"Index Funds" are mutual-fund investments that participate in particular indices. Their main objective when it comes to wallets is to imitate an index of the shares market.

Q.2 What are the major types to invest in index funds?

You can invest in index funds by choosing online or offline any mode whichever suits you.

Q3. Who should invest in index funds?

Consumers who are cautious should use index funds instead. Such monies don't need in-depth investigation and tracking.