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3 Year Average Returns
9.50%
Funds on Dhan
417
Index Funds are a type of mutual fund that aim to replicate the performance of a specific index, such as the NIFTY 50 or SENSEX. These funds invest in the same stocks and in the same proportions as the target index. The main objective is not to outperform the index but to mirror its performance. While these are the best Index Funds to invest in, you must know these 3 things before investing:
- Goal: Index Funds aim to mirror the performance of a specific stock market index, such as Bank Nifty. By investing in the same stocks and in the same proportions as the index, these funds offer a well-rounded exposure to the market.
- Investment Horizon: Index Funds are best suited for long-term investors who can commit to staying invested for at least 5 years, allowing time for the market to go through its cycles and potentially reap the benefits of steady growth.
- Risk: While generally less volatile than actively managed funds, Index Funds will reflect the ups and downs of the benchmark index they track, so fluctuations are part of the journey.
Best Index Funds to Invest in 2026
Note: 3Y & 5Y returns are annualised. Rest everything is absolute.
Scheme | AUM (in Cr.) | Fund Age | 1W | 1M | 3M | 6M | 1Y | 3Y  | 5Y |
|---|---|---|---|---|---|---|---|---|---|
Compare | ₹ 3,738 | 5 Yrs | 0.50% | -2.33% | 6.65% | 10.98% | 23.44% | 33.96% | 19.18% |
Compare | ₹ 4,584 | 6 Yrs | 1.20% | -0.11% | 5.13% | 8.79% | 21.28% | 29.24% | 16.85% |
Compare | ₹ 163 | 3 Yrs | 4.33% | -0.87% | 1.22% | 14.96% | 19.20% | 21.98% | 0.00% |
Compare | ₹ 192 | 6 Yrs | 3.15% | -1.08% | -0.00% | 14.77% | 17.73% | 21.28% | 14.60% |
Compare | ₹ 838 | 3 Yrs | 0.41% | -2.93% | -7.32% | -11.57% | -2.11% | 19.95% | 0.00% |
Compare | ₹ 2,132 | 4 Yrs | -0.30% | -1.96% | -6.88% | -11.46% | -6.59% | 19.16% | 0.00% |
Compare | ₹ 364 | 5 Yrs | 3.24% | -1.64% | -1.73% | 7.43% | 6.61% | 17.57% | 12.53% |
Compare | ₹ 260 | 3 Yrs | 3.30% | -1.57% | -1.83% | 7.38% | 6.33% | 17.43% | 0.00% |
Compare | ₹ 778 | 4 Yrs | 3.26% | -1.55% | -1.68% | 7.51% | 6.74% | 17.40% | 0.00% |
Compare | ₹ 234 | 4 Yrs | 2.53% | -2.04% | -7.69% | -1.01% | -4.15% | 17.08% | 0.00% |
Compare | ₹ 83 | 4 Yrs | 1.53% | -3.45% | -6.68% | -4.14% | -1.94% | 16.79% | 0.00% |
Compare | ₹ 295 | 3 Yrs | 1.16% | -1.86% | -5.83% | -2.83% | -2.21% | 16.51% | 0.00% |
Compare | ₹ 1,289 | 5 Yrs | 1.16% | -1.88% | -5.99% | -3.03% | -2.34% | 16.47% | 10.85% |
Compare | ₹ 109 | 13 Yrs | 1.15% | -1.86% | -6.00% | -2.73% | -2.13% | 16.46% | 10.76% |
Compare | ₹ 7,295 | 8 Yrs | 1.16% | -1.89% | -6.00% | -3.02% | -2.41% | 16.45% | 10.70% |
Compare | ₹ 509 | 6 Yrs | 1.16% | -1.90% | -6.02% | -3.08% | -2.49% | 16.41% | 10.71% |
Compare | ₹ 532 | 4 Yrs | 1.16% | -1.89% | -6.02% | -3.05% | -2.31% | 16.40% | 0.00% |
Compare | ₹ 2,318 | 5 Yrs | 1.16% | -1.91% | -6.03% | -3.04% | -2.46% | 16.39% | 10.67% |
Compare | ₹ 1,350 | 7 Yrs | 1.16% | -1.88% | -5.93% | -2.98% | -2.40% | 16.38% | 10.74% |
Compare | ₹ 1,275 | 4 Yrs | 1.16% | -1.89% | -5.95% | -2.98% | -2.42% | 16.36% | 0.00% |
Compare | ₹ 271 | 4 Yrs | 1.15% | -1.90% | -5.96% | -3.01% | -2.37% | 16.27% | 0.00% |
Compare | ₹ 9,744 | 13 Yrs | 1.16% | -1.90% | -6.04% | -3.18% | -2.60% | 16.20% | 10.56% |
Compare | ₹ 2,621 | 4 Yrs | 1.15% | -1.90% | -6.03% | -3.09% | -2.53% | 16.18% | 0.00% |
Compare | ₹ 184 | 6 Yrs | 1.17% | -1.88% | -6.00% | -3.28% | -2.72% | 16.10% | 10.39% |
Compare | ₹ 732 | 4 Yrs | 1.50% | -2.20% | -7.88% | -1.99% | -1.93% | 14.88% | 0.00% |
Compare | ₹ 2,410 | 3 Yrs | 0.46% | -6.96% | -2.68% | 5.79% | 1.65% | 14.13% | 0.00% |
Compare | ₹ 3,995 | 7 Yrs | 1.05% | -2.75% | -8.04% | -4.09% | -3.80% | 14.01% | 13.80% |
Compare | ₹ 469 | 5 Yrs | 1.05% | -2.77% | -8.09% | -4.18% | -4.00% | 13.88% | 13.69% |
Compare | ₹ 2,675 | 5 Yrs | 1.09% | -2.69% | -7.99% | -4.07% | -3.84% | 13.81% | 13.59% |
Compare | ₹ 1,240 | 4 Yrs | 1.05% | -2.76% | -8.07% | -4.11% | -3.93% | 13.75% | 0.00% |
Compare | ₹ 1,257 | 4 Yrs | 1.05% | -2.77% | -8.05% | -4.14% | -3.92% | 13.73% | 0.00% |
Compare | ₹ 699 | 3 Yrs | 1.04% | -2.77% | -8.08% | -4.16% | -4.04% | 13.66% | 0.00% |
Compare | ₹ 381 | 4 Yrs | 1.05% | -2.78% | -8.15% | -4.26% | -4.09% | 13.66% | 0.00% |
Compare | ₹ 1,728 | 3 Yrs | 3.16% | -1.96% | -4.21% | -2.78% | -4.06% | 13.63% | 0.00% |
Compare | ₹ 517 | 4 Yrs | 1.24% | -1.15% | -6.67% | -3.76% | -4.56% | 13.36% | 0.00% |
Compare | ₹ 140 | 13 Yrs | 1.25% | -1.18% | -6.63% | -3.57% | -4.17% | 13.29% | 9.93% |
Compare | ₹ 1,206 | 4 Yrs | 3.15% | -1.96% | -4.24% | -3.16% | -4.41% | 13.10% | 0.00% |
Compare | ₹ 91 | 3 Yrs | 0.02% | -2.43% | -10.08% | -7.06% | -8.33% | 12.87% | 0.00% |
Compare | ₹ 277 | 3 Yrs | 1.46% | -3.80% | -4.76% | 2.04% | -1.50% | 12.74% | 0.00% |
Compare | ₹ 1,243 | 7 Yrs | 1.46% | -3.65% | -4.83% | 1.95% | -1.72% | 12.66% | 12.97% |
Compare | ₹ 1,755 | 4 Yrs | 1.46% | -3.81% | -4.97% | 1.78% | -1.94% | 12.38% | 0.00% |
Compare | ₹ 754 | 3 Yrs | 1.46% | -3.81% | -4.97% | 1.80% | -1.89% | 12.38% | 0.00% |
Compare | ₹ 785 | 4 Yrs | 1.46% | -3.84% | -5.00% | 1.73% | -1.95% | 12.36% | 0.00% |
Compare | ₹ 3,454 | 6 Yrs | 1.47% | -3.72% | -4.87% | 1.91% | -1.73% | 12.25% | 12.68% |
Compare | ₹ 332 | 4 Yrs | 1.08% | -1.15% | -6.76% | -4.15% | -6.88% | 11.36% | 0.00% |
Compare | ₹ 2,550 | 9 Yrs | 1.59% | -0.29% | -6.44% | -3.96% | -6.08% | 11.22% | 10.34% |
Compare | ₹ 513 | 5 Yrs | 1.59% | -0.28% | -6.47% | -4.01% | -6.13% | 11.17% | 10.22% |
Compare | ₹ 1,705 | 5 Yrs | 1.59% | -0.27% | -6.48% | -4.08% | -6.21% | 11.16% | 10.27% |
Compare | ₹ 54 | 4 Yrs | 0.98% | -2.13% | -9.19% | -10.03% | -6.83% | 11.16% | 0.00% |
Compare | ₹ 267 | 4 Yrs | 1.57% | -0.30% | -6.49% | -4.07% | -6.19% | 11.10% | 0.00% |
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Disclaimer: Mutual fund investments carry market risks; read all scheme-related documents carefully. Past performance does not guarantee future returns.
About Index Funds
Index Funds are passively managed mutual funds that aim to replicate the performance of a specific market index like Nifty 50, Sensex, or Bank Nifty. Instead of a fund manager actively picking stocks, the fund simply buys all the stocks in the index in the same proportion. This approach results in lower expense ratios compared to actively managed funds.
- They track a specific benchmark index and aim to match its returns as closely as possible.
- Lower expense ratios compared to actively managed funds since minimal research and stock-picking is involved.
- Tracking error measures how closely the fund follows its benchmark – lower is better.
- They provide broad market exposure through a single investment, offering instant diversification.
Index Funds offer several distinct advantages:
- Low expense ratios since there is no need for active stock selection or frequent portfolio churning.
- Transparency – you always know which stocks the fund holds since it mirrors the index composition.
- Eliminates fund manager risk – performance is tied to the index, not individual decision-making.
- Broad diversification across all stocks in the index through a single investment.
- Historically, many actively managed funds have failed to beat their benchmark indices over long periods, making index funds a compelling choice.
Consider these points before investing:
- Index Funds work best with a long-term horizon (5+ years) as short-term market volatility can impact returns.
- They won't outperform the market – by design, they aim to match the index, not beat it.
- In sideways or declining markets, you cannot expect the fund manager to take defensive action as in actively managed funds.
- Choose funds with low tracking error and low expense ratios for the best index-tracking experience.
Index Funds are suitable for:
- Long-term investors who believe markets will grow over time and want to participate in that growth cost-effectively.
- Beginners who are new to mutual funds and want a simple, transparent starting point.
- Cost-conscious investors who want to minimize expense ratios and maximize net returns.
- Investors who prefer a passive, buy-and-hold strategy without worrying about fund manager changes or performance consistency.
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FAQs
Index funds track a specific stock market index, like the Nifty 50, Bank Nifty or BSE Sensex. When you invest in an index fund, your capital is automatically spread across all the stocks in that index proportionately. This means you are investing in a segment of the market rather than picking individual stocks.
Index funds are typically invested in the stocks that make up a particular index. For instance, if the fund tracks the Nifty 50, it invests in the same companies and in the same proportions as this index, which includes top companies across various sectors in India.
Certainly, profits can be earned through an investment in an Index Fund. However, they carry risks like any other investment. Your returns depend on how the underlying index being tracked by the fund performs.
No, index funds are not tax-free. You'll need to pay taxes on any profits you make, which are subject to capital gains tax. The rate depends on how long you've held the investment.
To choose the right index fund consider things like: tracking error which shows how close a fund is following its benchmark; expense ratio – indicates how much is paid for mutual fund management; past performance – even though it can never guarantee future success.
Usually there are no lock-in periods applicable to Index Funds meaning that such schemes do not have restrictions on buying/selling capital units at any point in time. However, it's best to verify for that specific scheme.
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