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The domestic equity market has been swinging both ways since March due to the US-Iran conflict. However, experts believe the worst could be behind, and the market will likely be in a recovery phase, with investors accumulating quality stocks on dips as the Nifty 50 tests key support levels. Many market experts believe that for long-term investors, this is the time to consider Nifty 50 index funds.
According to experts, investing in index mutual funds which mirror the Nifty 50 index could be a good long-term strategy. These funds enable investors to have exposure to India's top 50 companies, with strong market presence, financial strength, and that are less volatile during phases of market consolidation.
The domestic equity market is witnessing volatility and also exhibiting a gradual uptrend. Market experts suggest investors may consider investing in Nifty 50 index funds rather than trying to time the market.
Nifty 50 index mutual funds are low-cost, passively managed index funds that invest in the top 50 large-cap companies listed on the NSE.
These index funds offer stability since the 50 largest companies are relatively less volatile during market fluctuations.
A key feature of these funds is the automatic rebalancing since the Nifty 50 is rebalanced semi-annually.
"These funds mirror the performance of the Nifty 50 index. They are considered suitable for long-term investors seeking passive equity exposure to India’s leading companies. The returns of these funds are market-linked and come with a low expense ratio, increasing net returns for investors," said D D Sharma, managing director of MF King.
"The Nifty 50 includes only the big companies, which are considered the backbone of the Indian economy. Since this is an index fund, by investing in it, the investor gets the benefit of diversification, automatic balancing and low cost," Sharma said.
Data show that the Nippon India Index Fund – Nifty 50 Plan (direct) is among the best-performing funds in the category and has the lowest expense ratio among Nifty 50 index funds. The fund's expense ratio is just 0.07%, compared to the category range of 0.12% to 0.22%. The Axis Nifty 50 Fund has an expense ratio of 0.10% while the DSP Nifty 50 Index Fund comes with a cost ratio of 0.18%.
The Nippon India Index Fund – Nifty Plan has delivered a 5-year rolling CAGR of around 18.38%, which is among the highest in the category.
Disclaimer: This story is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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