Top ETFs In India

Exchange-traded funds, or ETFs, have remained quite popular with investors across the globe. These ETFs in India continue to offer investors of all types a fast, cheap, and highly efficient way to invest in a diversified investment portfolio. If you are an experienced investor or just starting to invest, understanding the top ETFs in India will significantly influence your investment choices and returns. This article will highlight the top ETFs in India and share a list of some of the more popular index ETFs available to investors. Ultimately, by the time you finish this article, you will clearly understand a few of the top ETFs in India and how you might incorporate them into your investment plan.

What Are ETFs?

Let’s begin with a short discussion about ETFs and how they work before discussing the top ETFs in India. Similar to stocks, exchange-traded funds (ETFs) are a kind of investment vehicle that is usually traded on stock exchanges. ETFs usually track a certain index, sector, commodity, or asset class. ETFs are advantageous because they allow investors to diversify their portfolios without buying individual stocks or bonds.

ETFs are typically liquid, that is, they have low expense ratios, and they are transparent. They especially appeal to long-term investors unquestioningly adhering to a passive investment strategy. ETFs in India have become more popular in recent years as investors seek to capitalise on India’s economic growth and global market growth.

Why Invest in ETFs in India?

There are multiple reasons ETFs are being democratised for Indian investors:

• Diversification: ETFs allow for investment in various asset classes, diversification, and reduced risk of investing in single stocks.
• Lower fees: ETFs normally have lower fees to manage compared to an actively managed fund, making them cost-effective for investors.
• Liquidity: ETFs trade on an exchange and can be bought or sold throughout the trading day, allowing increased flexibility and liquidity compared to mutual funds.
• Passive Investment Strategy: The majority of ETFs track the performance of the index stocking, thereby not requiring active management. This can equate to lower costs and better long-term performance for investors who want a passive experience.

Top ETFs in India

India has a growing market for ETFs, and several options are available for investors. Let’s look at some of the top ETFs in India that have proven reliable and profitable over the years.

1. Nippon India ETF Nifty BeES

Nippon India ETF Nifty BeES is one of India’s most popular and widely traded ETFs. It tracks the Nifty 50 Index, which consists of the 50 largest and most liquid stocks on the National Stock Exchange (NSE). The ETF is a solid solution for investors looking for exposure to the largest companies in India, particularly with its low expense ratios and high levels of liquidity.

2. ICICI Prudential Nifty ETF

The ICICI Prudential Nifty ETF is another exchange-traded fund that tracks the Nifty 50 Index and offers investors diversified exposure to the Indian equity market. With strong historical performance and a low expense ratio, it has become a favourite fund for retail and institutional investors.

3. SBI ETF Nifty 50

As an ETF that tracks Nifty 50, the SBI ETF Nifty 50 offers a low-cost option for investors interested in the top 50 companies in India. It is known for having a low expense ratio and is liquid, making it attractive for long-term growth.

4. HDFC Nifty ETF

The HDFC Nifty ETF is another strong contender in compiling the top ETFs in India. Like the previously mentioned ETF, the HDFC Nifty ETF tracks the Nifty 50 Index and provides general exposure to the Indian stock market. HDFC is a trusted institution, and with its operational efficiency as a fund manager, the HDFC Nifty ETF has also become a popular choice for investors.

5. UTI Nifty ETF

Finally, the UTI Nifty ETF is one of the oldest ETFs in India and is intended to track the Nifty 50 index. UTI is very good in terms of historical track record and low expense ratio, thus making it suitable for investors interested in steady long-term returns.

Index ETFs represent a type of ETFs that are intended to track the performance of a specific index. Index ETFs provide broad market exposure if you are looking for passive investing. Let’s consider some of the top index ETFs in India.

6. Nifty Next 50 ETF

The Nifty Next 50 ETF mirrors the performance of the Nifty Next 50 Index, which includes 50 companies that are next in line following the Nifty 50 companies by market capitalisation. The ETF allows investors to invest in mid-cap companies that are potential growth companies.

7. BSE Sensex ETF

The BSE Sensex ETF tracks the BSE Sensex, India’s oldest and most popular index, consisting of 30 of the largest and most well-established companies listed on the Bombay Stock Exchange (BSE). The ETF gives investors diversified exposure to India’s leading blue-chip stocks.

8. Nifty Bank ETF

The underlying index for the Nifty Bank ETF is the Nifty Bank Index, which represents the largest banks in India. This ETF is suitable for investors who want to benefit from the growth of the Indian banking industry.

What to Consider When Choosing an ETF in India

Here are a few considerations to take into account before investing in an ETF to ensure it meets your investment objectives:

• Expense Ratio: A lower expense ratio means you’ll pay less in management fees, which is important when growing your wealth over the lifecycle of a long-term investment.
• Liquidity: A highly liquid ETF will allow you to transact easily without large price changes.
• Performance: Past performance cannot guarantee future returns, but future returns indicate how the ETF has performed over a long macroeconomic period.
• Fund Size: Larger funds tend to be more liquid and efficiently managed.
• Sector or Index Focus: Choose an ETF based on your investment goals, whether broad exposure, specific sectors, etc.

Conclusion

The top ETFs in India provide a convenient and inexpensive way to invest in equity markets, such as Nippon India ETF, Nifty BeES, and Nifty Bank ETF. When selecting an ETF, consider the expense ratio, liquidity, and performance. Investing in an ETF can diversify and grow your portfolio by researching and applying a disciplined approach. Benefit from India’s long-term economic growth and create a diversified portfolio or investment plan today. Start investing with Religare Broking to explore the most effective strategies for your portfolio.