Best Index Funds in India 2026: Nifty 50, Nifty Next 50, Nifty Midcap 150, and More
Why Index Funds Are the Default for Most Investors in 2026
SEBI’s data shows that 80%+ of actively managed large-cap funds underperformed their benchmark after costs over 10 years. Index funds, by eliminating fund manager risk and minimising costs, have become the rational choice for most long-term investors. In 2026, the range of Indian index funds covers the entire equity spectrum.
Nifty 50 Funds: Core Portfolio
The Nifty 50 represents approximately 65% of India’s total market capitalisation. It is the natural anchor for any Indian equity portfolio. All major AMCs offer Nifty 50 index funds with TERs between 0.10% and 0.20%.
“Start investing with confidence! Explore
0 demat account
and grow your wealth.”
Nifty Next 50 Funds: The Aspiring Large-Caps
The Nifty Next 50 index tracks the 51st to 100th largest companies by market cap. These are often companies about to enter the Nifty 50, making this index a source of alpha over time. Historically, Nifty Next 50 has outperformed Nifty 50 with higher volatility.
| Index | Market Cap Range | Number of Stocks | 5Y CAGR (approx) |
|---|---|---|---|
| Nifty 50 | Top 50 companies | 50 | ~14% |
| Nifty Next 50 | 51st–100th companies | 50 | ~16% |
| Nifty Midcap 150 | 101st–250th companies | 150 | ~18% |
| Nifty Smallcap 250 | 251st–500th companies | 250 | ~20% (higher risk) |
| Nifty 500 | Top 500 companies | 500 | ~15% |
Recommended Index Fund Portfolio Allocation
| Investor Type | Nifty 50 | Nifty Next 50 | Midcap 150 | International |
|---|---|---|---|---|
| Conservative | 80% | 20% | 0% | 0% |
| Moderate | 60% | 20% | 15% | 5% |
| Aggressive | 40% | 20% | 30% | 10% |
| All-India | 50% | 20% | 20% | 10% |
Nifty Midcap 150 Index Funds
Midcap index funds have gained significant popularity as the category consistently outperformed large-caps over 5–7 year periods. Key funds include Motilal Oswal Nifty Midcap 150 Index Fund and Nippon India Nifty Midcap 150 Index Fund, both with TERs around 0.30%–0.40%.
Factor Index Funds: Smart Beta Investing
| Factor Index | Underlying Principle | Suitable For |
|---|---|---|
| Nifty 50 Value 20 | Low P/E, P/B stocks in Nifty 50 | Value investors |
| Nifty Alpha 50 | High price momentum stocks | Momentum investors |
| Nifty Quality 30 | High ROE, low debt companies | Quality-focused investors |
| Nifty Low Vol 30 | Lowest volatility large-caps | Defensive investors |
How to Build an Index Fund Portfolio via Lemonn
- Open Lemonn account and navigate to Mutual Funds section
- Search for your chosen index fund by name or AMC
- Select direct plan (not regular) saves 0.5%–1% in commission annually
- Set up SIP with desired monthly amount and date
- Review and confirm: Lemonn handles mandate registration
- Review portfolio quarterly: rebalance annually if allocations drift > 5%
Disclaimer
The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. Lemonn (Formerly known as NU Investors Technologies Pvt. Ltd) do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
Related Posts
Download Lemonn
Download my app for share market trading, ipo investment, trading account, and all your investment needs.
