Nifty Next 50 beats Nifty 50 most times. Time to move there?

When it comes to large-cap investing, many investors instinctively pick a Nifty 50 index fund. For instance, ICICI Prudential's Nifty 50 has net assets worth over Rs 12,600 crore, whereas its Nifty Next 50 index fund is a little over half its size, at about Rs 6,700 crore. This is a common theme for all fund houses. Their Nifty 50 funds attract most investor money, while the Next 50 funds get a step-sibling treatment.

So, does that mean investors are missing a trick here? Let's find out.

What are the Nifty 50 and the Nifty Next 50?

The Nifty 50 comprises the 50 largest Indian companies by market value. Bigshots like Reliance Industries , ICICI Bank and HDFC Bank are part of this index. These companies are usually the top dogs in their sector, with a long-standing track record.

Meanwhile, the Nifty Next 50 covers the next 50 companies, ranked from 51 to 100. Prominent companies include Hindustan Aeronautics (HAL), InterGlobe Aviation (IndiGo Airlines) and Tata Power .

Although both indices are part of the large-cap universe, their sectoral compositions differ. The Nifty 50 has a strong tilt towards Financials and IT, whereas the Nifty Next 50 is more diversified, with greater weight in Industrials, Healthcare and Consumer sectors.

The top 10 stocks and the top three sectors account for 32.7 per cent and 41.1 per cent of the portfolio in the case of Nifty Next 50, as against 56.7 per cent and 59.1 per cent in the case of Nifty 50, as of March 28, 2025.

Nifty 50 vs Nifty Next 50 performance

Let's now look at their long-term returns.

To do so, we analysed five-year returns on a daily basis over the last 15 years, and here's what we found: the Nifty Next 50 TRI outperformed the Nifty 50 TRI two-thirds of the time (66.9 per cent per cent, to be precise)!

Here's the breakdown of outperformance margins.

Is the Nifty Next 50 better?

The data shows that the Next 50 index is ahead, for sure. You can't argue against an investment option delivering over 3 to 10 percentage points higher returns almost four of 10 times.

However, there's a caveat. The Nifty Next 50 has been more volatile.

It has a standard deviation of 20.4 per cent, compared to 13.4 per cent for the Nifty 50. (For those unaware, standard deviation is a measure of the volatility and how much its returns tend to fluctuate from its average. So, the higher the standard deviation, the higher the volatility.)

The index's higher volatility cuts both ways. In strong years like 2017 and 2021, the Nifty Next 50 delivered 47.7 per cent and 30.9 per cent returns, respectively, well ahead of the Nifty 50's 30.3 per cent and 25.6 per cent. But in tough times, it also fell more - like the current market correction from September 2024 until April 2025, it dropped 14.5 per cent, considerably more than the Nifty 50's 6.6 per cent fall.

The takeaway? The Nifty 50 offers a steadier ride. The Nifty Next 50 moves faster, but with relatively sharper ups and downs.

Which one should you choose?

The Nifty 50 tends to offer a more stable investing experience, making it suitable for those who prioritise consistency and lower volatility.

The Nifty Next 50, meanwhile, features companies that are often in a faster growth phase, which can translate into higher returns, but with relatively higher short-term fluctuations.

Rather than viewing them as competing options, it's better to see them as complementary. For investors seeking a well-rounded large-cap exposure, the Nifty 100 funds provide a convenient way to combine both stability and growth potential.

Ultimately, the right choice depends on your goals, time horizon and comfort with market ups and downs.

Also read: Why Nifty 500 Equal Weight Index can be an interesting investment option