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Best Index Fund / ETF

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InvestPotato

I want to start a SIP in Index Fund/ETF.

What is the best Index Fund/ETF to consider?

1. Low Expense Ratio
2. Low tracking error

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Deal Subedar Deal Subedar
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Also I see most of the ETF are trading at 3-5% premium than the current Nifty Index

Deal Subedar Deal Subedar
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To add, can some one help me with the excel that will help be calcuate the tracking error?

Deal Subedar Deal Subedar
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ConfirmPassword wrote:

Navi nifty fifty 0.06%

I would rather stay away from new funds even though it is trusted. Low expense ratio does not mean less tracking error.

Moreover, to get investor attention for this new fund expense ratio might be kept less

Deal Subedar Deal Subedar
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christiano wrote:

Check other established nifty index funds.

Btw, I see most of them has expense ratio of 0.17 to 0.20

I believe ETF will be cheaper to consider.
But, the problem is it is not easy to invest in ETFs on SIP based.
It is good for buying the dip

Deal Subedar Deal Subedar
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So, I was getting a FOMO of not starting SIPs.

For the last 6-8 months I was trying to “Time the market” to do lumpsum investing, But i believe i will never be able to time the market. Still, i think myself i am getting in a wrong time, many will say the same,

But I have started the SIP of Rs. 1000 in UTI Nifty Index Fund (Basis – I trust UTI, and 4 star from crisil)
For me, I will think i am spending 1000 in leisure activity every month.

To get out the fear of SIP, i am starting with 1k, will gradually increase it to 5K (across other schemes) and do lumpsump investment in the dips.

Critic Critic
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I prefer nippon niftybees etf direct purchase from stock market for those “timing/lumpsum” days.

Deal Subedar Deal Subedar
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guest_999 wrote:

I prefer nippon niftybees etf direct purchase from stock market for those “timing/lumpsum” days.

What about regular investments?

Normal SIPs in large caps/bluechip funds?

Deal Subedar Deal Subedar
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guest_999 wrote:

I am not sure how expense ratio works in case of transactions done in secondary market of ETFs.
@Ramta_Jogi

No, so expense ratio is the money charged by fund houses.

Fund house internally manage the % distribution of 50 constituents shares in the ETFs.

Nifty 50 is not always same, some stock % change, some stocks get in and out of the index.
To manage this fund house charges a fees, the same is less in ETF than that of index funds

EX -

UTI Nifty Index fund – 0.20%
UTI Nifty ETF – 0.06%

Critic Critic
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InvestPotato wrote:

No, so expense ratio is the money charged by fund houses.

Fund house internally manage the % distribution of 50 constituents shares in the ETFs.

Nifty 50 is not always same, some stock % change, some stocks get in and out of the index.
To manage this fund house charges a fees, the same is less in ETF than that of index funds

EX -

UTI Nifty Index fund – 0.20%
UTI Nifty ETF – 0.06%

This seems to be alright but still I have doubts especially considering the passive nature of some ETF funds so waiting for replies from someone experienced(already tagged him).

Deal Lieutenant Deal Lieutenant
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niftybees
bankbees
motilal nasdaq fof (for international exposure)

Deal Subedar Deal Subedar
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InvestPotato wrote:

What is the

1. Expense ration of nifty nippon bees?
2. what is the tracking error of it?

The fund house has not mentioned the expense ratio or the tracking error – https://mf.nipponindiaim.com/FundsAndPerformanc...

Expense ratio – 0.05%

Tracking error – 0.27%

Add Demat AMC, brokerage fee and other fees (plus gst) to expense ratio.

ETFs can’t charge more than 0.8% expense fee. If Aum is over 500 crore then expense ratio comes down to 0.65%. Nippon nifty Bees has Aum of around 4,000 crore and hence the small expense ratio.

@guest_999

Deal Lieutenant Deal Lieutenant
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Ramta_Jogi wrote:

Add Demat AMC, brokerage fee and other fees (plus gst) to expense ratio.

Many people miss this while comparing the cost.

I would say use Index funds for regular SIP purpose, and ETFs for onetime lumpsum during the market dips.
Also prefer prefer Index/ETFs for large caps, but prefer actively managed MFs for small caps. Just my personal preference wrt my own analysis of the past fund comparison stuck_out_tongue

Hunk Hunk
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Jabardasti index funds maat lo. Check for a good actively managed mutual fund. You ll pay higher expense ratios but historically actively managed funds have beaten indexes by a long margin. 🙃🙂

Deal Lieutenant Deal Lieutenant
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Stop focusing so much on expense ratios and focus on your target return. If you want to make 10-12% returns over long term then index funds are fine else look at equity based funds

These youtubers have unnecessary highlighted expense ratio, it’s important but it can’t be looked at in isolation. There are multiple factors to consider – investment horizon, past returns, portfolio of stocks, aum of the fund, portfolio rebalancing etc.

I would even prefer investing with a good advisor and going with normal schemes provided I’m achieving my targeted returns and goals.

Deal Subedar Deal Subedar
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InvestPotato wrote:
To manage this fund house charges a fees, the same is less in ETF than that of index funds

EX -

UTI Nifty Index fund – 0.20%
UTI Nifty ETF – 0.06%

A bit outdated examples there for comparison.

Motilal nifty index fund has expense ratio of just 0.1% while the recently launched NAVI mutual fund has an expense ratio of 0.06%.

Deal Cadet Deal Cadet
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And what are the tracking errors? Where to get that data?

Hunk Hunk
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yolodime wrote:

And what are the tracking errors? Where to get that data?

Freefincall 🙂

Deal Lieutenant Deal Lieutenant
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bikidas2060 wrote:

Jabardasti index funds maat lo. Check for a good actively managed mutual fund. You ll pay higher expense ratios but historically actively managed funds have beaten indexes by a long margin. 🙃🙂

historically which active fund is there from the last 15-20 year paji

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