Like other mutual fund categories, index funds also witnessed a significant drop in inflows in February. There was a 20.5% drop to Rs 4,177.02 crore in inflows during the month, against Rs 5,254.66 crore in January 2024. This decline in index fund inflows was the result of an overall weak sentiment due to a market downturn.
There were around 298 index funds with over 1.29 crore folios in the mutual fund market, as of February 28, which shows how much importance fund houses give to this mutual fund category.
So, if you are also planning to invest in 2025 and want better returns at a lower cost, then index funds can be a great option. These funds are suitable for relatively risk-averse investors as these funds track a particular market index, making them less prone to equity-linked risks.
Also read: Top 10 tax-saving mutual funds in 2025 with 5-year returns up to 32 pc
In this article, we have selected the top 5 cheapest index funds, based on their expense ratio. Here are they:
1. Edelweiss Nifty 50 Index Fund – Direct Plan
Expense ratio: 0.05%
Benchmark: NIFTY 50 TRI
2. Navi Nifty 50 Index Fund – Direct Plan
Expense ratio: 0.06%
Benchmark: NIFTY 50 TRI
3. Kotak Nifty 50 Index Fund – Direct Plan
Expense ratio: 0.07%
Benchmark: NIFTY 50 TRI
4. Nippon India Index Fund – Nifty 50 Plan – Direct Plan
Expense ratio: 0.07%
Benchmark: NIFTY 50 TRI
5. Mirae Asset Nifty 50 Index Fund – Direct Plan
Expense ratio: 0.08%
Benchmark: NIFTY 50 TRI
(Data Source: Value Research)
Also read: Top 5 dividend yield mutual funds with highest returns in 5 years
Great returns despite falling market
The stock market has remained volatile for the last few months. Nifty has given negative returns in the last 6 months and 1 year, due to which many investors suffered losses. Since the Nifty was at its peak in September 2024, it has fallen by about 14% till now.
But it is worth noting that despite this short-term volatility in the stock market, these 5 index funds reviewed in the story have given an annualised return of more than 11% in the last 3 years.
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