Best ETFs in India in October 2024 – Based on 5yr CAGR

Exchange-Traded Funds (ETFs) are investment funds that trade on stock exchanges, much like individual stocks. They are composed of a basket of assets, including stocks, bonds, or commodities, and offer investors a diversified portfolio in a single trade. As ETFs track various indices or sectors, they can be a choice for those seeking to minimise risk while gaining exposure to multiple assets. In this article, check the best ETFs in India in October 2024, based on their 5-yr CAGR and learn the factors to consider while investing. 

Best ETFs in India in October 2024 – 5yr CAGR Basis

Note: The best ETF funds in India provided here are as of October 4, 2024. The ETF Funds are sorted based on the 5-yr CAGR.  

Overview of the 5 Best ETFs in India

• CPSE ETF

Launched on March 28, 2024, the CPSE ETF is managed by Nippon India Mutual Fund. This open-ended index scheme tracks the Nifty CPSE Index, and as of July 31, 2024, it boasts a 3-yr CAGR of 58.44%.

• Motilal Oswal Midcap 100 ETF

The Motilal Oswal Midcap 100 ETF is an open-ended scheme offered by Motilal Oswal Mutual Fund, launched on January 31, 2011. This ETF targets investors interested in the top 100 Indian midcap companies and uses the Nifty Midcap 100 TRI as its benchmark index. As of July 31, 2024, the fund has achieved a 3-year CAGR of 28.56%.

• Nippon India ETF Nifty Midcap 150

Launched on January 31, 2019, the Nippon India ETF Nifty Midcap 150 is an open-ended index scheme offered by Nippon India Mutual Fund. This ETF uses the Nifty Midcap 150 TRI as its benchmark index. As of July 31, 2024, the fund has reported a 3-year CAGR of 27.60%.

• Bharat 22 ETF

The Bharat 22 ETF is an open-ended scheme managed by ICICI Prudential Mutual Fund, launched on November 27, 2017. This ETF benchmarks against the S&P BSE Bharat 22 Index and has achieved a 3-year return of 37.35%.

• Nippon India ETF S&P BSE Sensex Next 50

Nippon India ETF S&P BSE Sensex Next 50 is an open-ended scheme managed by Nippon India Mutual Fund, launched on July 30, 2019. This ETF benchmarks against the BSE Sensex Next 50 TRI and has achieved a 3-year return of 24.69%.

Factors to Consider While Investing in ETFs

• Investment Objectives: Determine your investment goals, whether you’re looking for capital appreciation, income generation, or diversification. Your objectives will guide your choice of ETFs.
• Expense Ratio: Check the expense ratio of the ETF, which is the annual fee expressed as a percentage of your investment. Lower expense ratios can significantly enhance your returns over time.
• Liquidity: Assess the trading volume and liquidity of the ETF. Higher liquidity generally means narrower bid-ask spreads, reducing trading costs. Look for ETFs with substantial daily trading volumes.
• Tracking Error: Evaluate the ETF’s tracking error, which measures how closely the fund’s performance matches that of its benchmark index. A lower tracking error indicates better performance in mirroring the index.
• Underlying Index: Understand the index that the ETF tracks. Research the methodology and components of the index to ensure it aligns with your investment strategy and risk appetite.
• Diversification: Consider the level of diversification offered by the ETF. An ETF that invests in a broad range of securities can help mitigate risks associated with individual stocks.
• Fund Size: Look at the total assets under management (AUM) of the ETF. Larger funds tend to be more stable and less likely to be liquidated, while smaller funds may carry higher risks.
• Market Conditions: Evaluate the current market conditions and economic indicators that may impact the sectors or asset classes represented by the ETF.
• Fund Manager Reputation: Research the fund management company’s track record, expertise, and reputation in managing ETFs. A reputable manager can enhance your investment’s reliability.
• Risk Tolerance: Assess your risk tolerance and the inherent risks associated with the ETF’s underlying assets. Different sectors and asset classes come with varying levels of volatility.

Conclusion

While ETFs offer a convenient and flexible way to diversify your investment portfolio, it’s crucial to assess how they align with your broader financial strategy and goals. By adopting a well-researched approach and making informed choices, you can effectively integrate ETFs into your investment plan, enhancing your potential for long-term success. 

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.