To play safe as an investor in the market, an investor needs to know that diversification in the investment world is the answer. Ultimately, index funds turn out to be the best option for diversified investing.
Index funds are the mutual funds which involve investing in the market index such as SENSEX and NIFTY50 which is managed by the professionals in the market. The value of the index funds is derived from the underlying indices. For example, if the SENSEX is outperforming then it will be beneficial for an investor to invest in the index funds with SENSEX indices.
Best Five Index Funds To Invest In 2019
1. UTI Nifty Fund – It is an open-ended equity fund which was launched on January 1, 2013, is less risky. It was observed that in 5 years, these have given a return of 12.86%. Its fund size is 716 crore rupees.
2. ICICI Prudential Nifty Next 50 Index Fund – It is an open-ended equity fund launched on January 2013 with the fund size of rupees 157 crores. It is riskier than UTI Nifty fund. As per the records, these funds are known to provide 18.12% returns in five years.
3. HDFC Index Funds-SENSEX Plan Direct – This fund is an equity-oriented open-ended scheme and is high in risk due to fluctuating index. It was introduced in December 2012. With the fund size of 117 crore rupees, these have given a return of 12.80% in 5 years.
4. HDFC Index Fund-Nifty Plan Direct – It was launched in December 2012 with the fund size of rupees 312 crores. It is moderate in risk. It is an open-ended scheme. It was noticed that the return of 12.98% was produced by this scheme in the past 5 years.
5. SBI Nifty Index Fund – This scheme invests in the shares which are included in the Nifty50. Its purpose is to give the same return as Nifty50. It is an open-ended scheme with the fund size of rupees 317 crores. This scheme has provided a return of 12.48% in five years.
After the comparison of the above five schemes, it is clear that the ICICI Prudential Nifty Next 50 Index Fund has given the maximum return i.e. 18.12%. Although, based on the above information it cannot be decided that which the best index funds are for you to invest in. This is because all these returns are on an average basis and the indices are volatile.
How To Choose The Best Index Funds?
1. Investment Goals – Always choose a fund that meets your investment goals. This refers to your expectations regarding the number of returns you want.
2. Time Duration – Another important factor to consider while choosing an index mutual fund is the lock-in period for the investment to give out returns.
3. Risk tolerance – Knowing the risk involved in the funds you’re investing in is very important. If you like low risk and moderate return then choose the one that meets your requirements.
So this was everything you need to know about the best index funds and how to choose the most appropriate one.