Best ETFs in India

In India, exchange-traded funds, or ETFs, are a common form of investment.  The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) both trade ETFs. In India, trading ETFs is comparable to trading equities.  Similar to purchasing or selling stocks, investors can use a stockbroker to purchase or sell exchange-traded funds (ETFs).  The exchange lists the ETFs, and the market's supply and demand determine how much each one costs during the trading day. In India, an investor must have a demat account in order to purchase an ETF.  You can easily open it with 5paisa if you don't have one.

You can use your stockbroker's online trading platform or give them a call to place an order to purchase or sell an ETF after you have a demat and trading account with 5paisa.  Depending on the ETF's current market price, the order will be executed.

List of Best ETFs in India

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Data as of 21 April, 2025

Best ETFs to Invest

Here's an overview of the best performing ETFs in India, based on their past returns:

1. Nippon India ETF Junior BeES (JUNIORBEES)

The Nippon India ETF Junior BeES tracks the Nifty Next 50 Index, offering exposure to the next 50 largest companies after the Nifty 50. It has demonstrated excellent long-term performance, making it a suitable choice for growth-oriented investors.

2. SBI NIFTY NEXT 50 ETF (SETFNN50)

The SBI NIFTY NEXT 50 ETF also tracks the Nifty Next 50 Index, providing exposure to potential future large-cap stocks. It has been a strong performer across all time frames.

3. KOTAK NV 20 ETF (KOTAKNV20)

The KOTAK NV 20 ETF focuses on value stocks within the Nifty 50 by tracking the Nifty50 Value 20 Index. Its impressive long-term performance makes it appealing to value investors.

4. Invesco India NIFTY ETF (IVZINNIFTY)

The Invesco India NIFTY ETF tracks the Nifty 50 Index, offering exposure to India's top 50 companies. It has shown solid performance across all time periods.

5. Motilal Oswal M50 ETF (MOM50)

The Motilal Oswal M50 ETF is another option that tracks the Nifty 50 Index, providing exposure to India's 50 largest companies. It is known for consistent performance, particularly over the long term.

6. Quantum Nifty ETF (QNIFTY)

The Quantum Nifty ETF also tracks the Nifty 50 Index, offering similar exposure to large-cap Indian stocks. It has delivered strong and consistent performance across time frames.

7. Bandhan NIFTY ETF (IDFNIFTYET)

The IDFC NIFTY ETF tracks the Nifty 50 Index as well, but being a newer ETF, it has limited long-term data. However, it has delivered solid short- and medium-term performance.

8. SBI NIFTY 50 ETF (SETFNIF50)

The SBI NIFTY 50 ETF, managed by SBI Funds Management, also tracks the Nifty 50 Index. It has been a consistent performer across all time periods.

9. Invesco India Gold ETF (IVZINGOLD)

The Invesco India Gold ETF tracks domestic gold prices, offering exposure to gold without physical ownership. While returns are moderate, it serves as a valuable tool for portfolio diversification.

10. Kotak Nifty Bank ETF (BANKNIFTY1)

The Kotak Nifty Bank ETF tracks the Nifty Bank Index, providing focused exposure to the banking sector. It has moderate short-term returns but shows strong long-term performance.

11. Nippon India ETF Shariah BeES (SHARIABEEE)

The Nippon India ETF Shariah BeES tracks the Nifty50 Shariah Index, offering Shariah-compliant investment in large-cap stocks. It has performed strongly, particularly in the short and long term.

12. SBI 10 YEAR GILT ETF (SETF10GILT)

The SBI 10 YEAR GILT ETF tracks 10-year Government of India bonds, offering exposure to government securities. While returns are lower, they are more stable, making it suitable for conservative investors.

13. Nippon India ETF Bank BeES (BANKBEES)

The Nippon India ETF NIFTY Bank BeES tracks Nifty Bank TRI, offering exposure to the banking sector. By replicating the securities of the Nifty Bank Index in the same proportion, it aims to match the Index's performance. 

14. UTI BSE Sensex ETF (SENSEXETF)
The UTI BSE Sensex ETF tracks the BSE Sensex, offering exposure to the 30 largest and most actively traded stocks on the BSE. It delivers moderate performance across all time frames.

15. CPSE ETF (CPSEETF)
Finally, the CPSE ETF (CPSEETF) tracks the Nifty CPSE Index, investing in Central Public Sector Enterprises. It boasts exceptional short-term performance and solid medium-term returns.

These ETFs offer diverse investment options, covering various indices, sectors, and asset classes. The Nifty Next 50 and Value 20 ETFs have shown strong performance across all time frames. Nifty 50 ETFs offer consistent returns, while sector-specific and thematic ETFs like Gold, Banking, and Shariah-compliant options provide targeted exposure. The CPSE ETF stands out with its exceptional short-term performance. When choosing among these ETFs, investors should consider their risk tolerance, investment horizon, and overall portfolio strategy.

What Are ETFs?

ETFs in the stock market are investment funds that trade like stocks. An ETF (Exchange Traded Fund) pools money to invest in a basket of assets, offering diversification and flexibility. ETFs investment is popular for being cost-effective and easy to access for all types of investors.

What to Look for When Selecting ETFs?

A number of important considerations should be made when thinking about investing in Exchange-Traded Funds (ETFs):

Selection of the Underlying Index:  Start by selecting the market of interest and choosing whether to invest in a particular sectoral index or the benchmark index as a whole.

Total Expense Ratio (TER): To pay for expenses, ETFs levy a yearly fee, usually a modest portion of assets.  The TERs of various funds that track the same index may differ.

Tracking Error: An ETF must closely resemble its benchmark index.  The difference in returns between the index and the ETF is measured by traditional tracking error.  Better performance alignment is shown by a lower tracking error.

Liquidity: A key factor in ETFs, liquidity influences bid-ask spreads.  Narrower spreads are typically found in high-liquidity ETFs, which makes them more appealing for trading.

Assets Under Management (AUM) is calculated by multiplying the market price per share by the number of outstanding shares.  It varies according to unit purchases and redemptions as well as the values of the underlying securities.  AUM is a good indicator of liquidity because it frequently corresponds with higher liquidity.

To select ETFs, it’s important to know how to select best ETF based on factors like performance, expense ratio, and liquidity. Understanding how to choose a good ETF involves evaluating the underlying assets, sector exposure, and past returns. It’s essential to assess your investment goals and risk tolerance before making a choice.

How much to invest in ETF per month?

The amount to invest in ETFs per month should align with your financial goals and budget, starting with an affordable amount like ₹1,000 and increasing as your financial understanding grows.

Financial Goals: Your investment amount should reflect your financial objectives, such as saving for retirement, a vacation, or a home down payment. Clearly defining these goals will guide how much you should set aside each month.

Budget and Affordability: Assess your monthly income and expenses to determine how much you can comfortably invest without straining your finances. It's advisable to start with an amount that doesn’t affect your essential financial obligations. A common recommendation is to aim for at least 10-20% of your disposable income for investments.

Starting Small: Consider starting with smaller amounts (e.g., ₹1,000 or $100) per month to familiarize yourself with the market dynamics. As you gain more insight and confidence over time, you can gradually increase your investment contribution.

To start investing in ETF, you need to understand how to invest in ETF. If you are looking for a more consistent approach, you can learn how to invest in ETF monthly. This strategy allows you to make regular investments, providing long-term benefits. By investing in ETFs, you can diversify your portfolio while minimizing risks associated with individual stocks.

Benefits and Risks

Benefits of ETF include diversification, low cost, and tax efficiency. Advantages of ETFs are flexibility in trading, transparency in pricing, and ease of access to various sectors. However, investors must consider risks of ETF such as market volatility, tracking error, and liquidity challenges.

Benefits of Investing in ETFs:

Diversification: Exposure to multiple stocks/sectors reduces individual stock risk.
Lower Costs: ETFs generally have lower expense ratios than mutual funds.
Transparency: Listed on exchanges with real-time price tracking.
Flexibility: Tradeable throughout the day like stocks.
Tax Efficiency: Typically more tax-efficient than mutual funds over the long term.

Risks Involved in ETFs:

Market Risk: ETF value fluctuates with the market movements of underlying assets.
Tracking Error Risk: ETFs may not perfectly mirror the benchmark index’s performance.
Liquidity Risk: Low liquidity in underlying assets can affect ETF pricing and tradability.

Conclusion

ETFs offer a unique blend of diversification, cost-effectiveness, and flexibility, making them an attractive option for many investors in India. From broad market exposure to sector-specific strategies, from domestic markets to international ones, ETFs provide a wide range of investment opportunities. Whether you're looking for the best ETF to invest in 2025 or exploring the top ETF funds in India, these funds offer a convenient way to build a balanced portfolio.

Remember, successful investing is not just about picking the right investments but also about maintaining a disciplined approach, regularly reviewing your portfolio, and staying aligned with your financial goals.