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Index funds beyond Nifty 50: Nifty Next 50, Mid Cap 150, Small Cap 250

In this article, we will explore passive investing beyond Nifty 50. We will explore various indices like Nifty Next 50, Mid Cap 150, and Small Cap 250 indices and the index funds based on these indices.
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When it comes to investing in index funds, many investors confine themselves to Nifty 50 index fund for two reasons. One, till about some time back, there weren’t many options available to investors. Secondly, even if the options were available, there was very little awareness about these funds. In this article, we will explore passive investing beyond Nifty 50. We will explore various indices like Nifty Next 50, Mid Cap 150, and Small Cap 250 indices and the index funds based on these indices.

Nifty Next 50

The Nifty Next 50 Index includes 51 – 100 large stocks based on market capitalisation. The index was launched in 1996 with a base value of 1000.

Note: The above data is as of 31st August 2021

As seen in the above chart, as of 31st August 2021, the Nifty Next 50 Index has topped the level of 40,000. Since its launch in the last 25 years, the index has multiplied shareholder wealth by a huge 40 times, giving a return of 16.19 CAGR.

Index funds based on Nifty Next 50 Index

In the above section, we saw how the Nifty Next 50 Index has performed. Now, let us see which AMCs offer index funds based on the Nifty Next 50 Index and the returns given by these schemes. Some of these schemes include:

Scheme nameAUM (Rs. Crores)6 months1 year2 years
UTI Nifty Next 50 Index Fund1,28224.40%53.36%24.76%
Motilal Oswal Nifty Next 50 Index Fund90.2924.08%51.69%NA
ICICI Prudential Nifty Next 50 Index Fund1,53524.23%53.17%24.23%
DSP Nifty Next 50 Index Fund138.5524.35%53.23%24.25%
L&T Nifty Next 50 Index Fund34.9924.22%53.26%NA

Note: The above returns are as of 20 September 2021. The returns are for direct plans with growth options. The six and one-year returns are absolute. The two-year returns are CAGR. Some funds have not been completed two years since launch, and hence the two-year returns are not available for these funds.

Nifty Midcap 150 Index

The Nifty 50 and Nifty Next 50 together represent India’s 100 largest companies. The Nifty Midcap 150 Index represents the next 150 companies (101 – 250) in terms of market capitalisation. As per SEBI’s classification of companies, these are classified as mid-cap companies. The index was launched in April 2016.

As seen in the above chart, as of 31st August 2021, the Nifty Midcap 150 Index has topped the level of 10,000. In the last 15 years, the index has multiplied shareholder wealth by more than 10 times, giving a return of 17.03 CAGR. Last year, in 2020, during the Covid induced overall stock market fall, the Nifty Midcap 150 Index fell to a low of around 5,000. Since then, in a little over a year, the index has doubled, thus, creating wealth for investors who kept the faith and stayed invested.

Index funds based on Nifty Midcap 150 Index

In the above section, we saw how the Nifty Midcap 150 Index has performed. Now, let us see which AMCs offer index funds based on the Nifty Midcap 150 Index and the returns given by these schemes. Some of these schemes include:

Scheme nameAUM (Rs. Crores)3 months6 months1 year
Motilal Oswal Nifty Midcap 150 Index Fund328.7210.30%24.17%64.33%
Aditya Birla Sun Life Nifty Midcap 150 Index Fund48.9910.33%NANA
Nippon India Nifty Midcap 150 Index Fund164.8110.29%24.28%NA

Note: The above returns are as of 20 September 2021. The returns are for direct plans with growth option. Some funds have not completed six months and one year since launch, and hence the six-months and one-year returns are not available for these funds.

Nifty Smallcap 250 Index

The Nifty 50 and Nifty Next 50 together represent India’s 100 largest companies, and the Nifty Midcap 150 Index represents the next 150 companies (101 – 250) in terms of market capitalisation. The Nifty Small cap 250 Index fund represents the next 250 companies (251 – 500) in terms of market capitalisation. As per SEBI’s classification of companies, these are classified as small-cap companies. The index was launched in April 2016.

As seen in the above chart, as of 31st August 2021, the Nifty Smal lcap 250 Index is hovering around the level of 9,000. In the last 15 years, the index has multiplied shareholder wealth by around 9 times, giving a return of 15.66% CAGR. Last year, in 2020, during the Covid induced overall stock market fall, the Nifty Smallcap 250 Index fell to a low of around 3,000. Since then, the index has multiplied three times in a little over a year, thus creating wealth for investors who kept the faith and stayed invested.

Index funds based on Nifty Smallcap 250 Index

In the above section, we saw how the Nifty Small cap 250 Index has performed. Now, let us see which AMCs offer nifty 250 index funds based on the Nifty Smallcap 250 Index and the returns given by these schemes. Some of these schemes include:

Scheme nameAUM (Rs. Crores)3 months6 months1 year
Motilal Oswal Nifty Smallcap 250 Index Fund207.9610.75%30.59%75.07%
Nippon India Nifty Smallcap 250 Index Fund216.4510.90%31.21%NA

Note: The above returns are as of 20 September 2021. The returns are for direct plans with growth option. Some funds have not completed one year since launch, and hence the one-year returns are not available for these funds.

How to select an index fund for investment?

In the above section, we have seen how you can invest in other index funds (with benchmark Nifty Next 50, Nifty Midcap 150, Nifty Smallcap 250) apart from Nifty 50 index funds. The next question that will come to your mind is how you should select an index fund for investment? If you observe the returns of index funds with the same benchmark (for example, Nifty Next 50), the difference is usually in the range of +/-1%. In such a scenario, you should consider two factors for selecting an index fund.

  1. Expense ratio
    The various expenses incurred for running a mutual fund scheme are charged in the form of an expense ratio. As an investor, you should ideally select an index fund with the lowest expense ratio.
  2. Tracking error
    A fund manager keeps some scheme money in the form of cash to meet redemptions and other expenses. As a fund manager does not invest 100% of the scheme money at all times, there is a difference in the returns given by the benchmark (index) and the returns given by the scheme. The difference in return is known as the tracking error. As an investor, you should ideally select an index fund with the lowest tracking error.

Risk allocation based on market capitalisation

An ideal index fund for investment will be one with a combination of the lowest expense ratio and lowest tracking error. A combination of four index funds involving a Nifty 50 Index Fund, Nifty Next 50 Index Fund, Nifty 150 Midcap Index Fund, and Nifty 250 Smallcap Index Fund can give you exposure to the top 500 stocks. You can consider building an investment portfolio with one SIP (Systematic Investment Plan) in each of these funds. It will give you exposure to stocks across market capitalisation and also diversify your portfolio, which is important as per asset allocation strategy.

Investing in index funds with Glide Invest App

In the above sections, we saw what the index fund investment options are for an investor, and how they can select an index fund for investment. You can partner with the Glide Invest App for your index fund investments. You will get the recommendations for the best mutual fund schemes (index funds and other funds) based on your risk profile. You will get advice on how to plan and systematically invest towards your financial goals

With Glide Invest, you will get guidance for:

  1. A personalised risk profile assessment
  2. Identifying your financial goals
  3. Appropriate asset allocation
  4. Making a financial plan for each goal
  5. Automating the financial plan
  6. Review and analysis of your financial plan 
  7. Hand holding you till your financial goals are achieved

To start investing towards your financial goals, download the Glide Invest App from Google Play Store or Apple App Store and get started.

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