2 Best And Top Rated Index Funds To Invest In 2022

Index funds are suitable for first time equity investors as these funds typically provide exposure to index constituents and tend to replicate similar returns. Further, taking notice of January inflows for the year 2022, they raked in the highest net inflows to the tune of Rs. 4914 crore.

Likewise, here are 2 integral pointers to note when investing in Index funds:

1. Expenses ratio: First as in the long run, higher expense ratio can be detrimental for your returns from the mutual funds. One should always go with the fund with the lower expense ratio. Also, direct mutual funds bear a lower expense ratio.
2. Tracking error: The fund with the lower tracking error should be preferred. Tracking error that is the fund's return should closely mimic that of the fund.

So, as Index fund can be good addition to your portfolio for 2022, here are the top rated Index funds

1. UTI Nifty Index Fund-Direct Plan:

This is the Index fund from the house of one of the oldest mutual fund house.The direct plan carries a lower 0.2% expense ratio. The NAV of the fund as on February 17, 2022 is 116.49. Fund has 100.19% investment in Indian stocks of which 90.52% is in large cap stocks, 0.58% is in mid cap stocks.

The top holdings in the fund are Reliance Industries, HDFC Bank, Infosys, ICICI Bank, HDFC etc.

This fund is 4 star rated by CRISIL while 3 star rated by Value Research for the Direct plan.

In the 5 year period, Rs. 10000 monthly SIP is now worth Rs. 9.2 lakh. SIP in the fund can be initiated for Rs. 500.

2. Tata Index Sensex Fund:

This is Value Research Online 4 star rated fund. The fund's 1-year return has been lower than the benchmark S&P BSE Sensex TRI. The fund's top holdings are RIL, HDFC Bank, Infosys, ICICI Bank, HDFC, TCS etc. NAV of the fund as on February 17, 2022 is Rs. 148.87.

The expense ratio of the Direct plan is 0.29%.
Minimum SIP investment amount in the fund is Rs. 150. Rs. 10000 SIP in the fund started 5 years hence is now valued at Rs. 9.19 lakh.

Index Fund	SIP Annualised 5year returns	Annualised 5-year returns
UTI Nifty Index fund	17.20%	15.53%
Tata Index Sensex Fund	15.49%	16.58%

Index fund tend to be advantageous: Do keep note of it

Index funds address all the issues confronted by seasoned as well as new investor class as they do away with the need to time the markets. Further the fund puts the corpus in the proportion as well as into the equities as in the index. So, apart from the basic indices, you also have the choice to even diversify your portfolio to international equities with NASDAQ 100 specific indices also being available now.

Furthermore, here the risk is limited in nature as you only are exposed to the risk factor as per the index and do not take additional risk which is best suited for first time investors. Also, the cost factor is low which helps in eventually getting a higher return.

Disclaimer:

The above story is for reference only. We are not professional financial advisors. Please make the final take after consulting with your financial advisor.

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