Nifty 500 Index Funds: Balancing Broad Market Exposure with Risks

Investors considering Nifty 500 tracking mutual funds can benefit from broader market exposure and enhanced diversification. These funds offer access to about 90% of India's listed universe, including large, mid, and small-cap stocks. Historically, Nifty 500 has outperformed Nifty 50, with a 17.6% average 1-year rolling return compared to 15.89% for Nifty 50 over the past decade. However, investors should be aware of potential liquidity issues with smaller-cap stocks and higher volatility compared to Nifty 50 funds. With lower expense ratios than actively managed funds, Nifty 500 index funds provide a cost-effective way to capture India's growth story across various market segments.

 

Sources: Motilal Oswal Mutual Fund, Angel One, Groww