Ashutosh Gupta explains how to find the best index fund
Which is the best Nifty index fund?
- V Swaminathan
There are two main criteria that one should consider while opting for an index fund. One is the expense ratio. These days, index funds are pretty competitive as there are plenty of options at an expense ratio of as low as 10-15 basis points for the direct plan. So, there is no point paying too much more than that.
The second parameter is tracking error. It is a reflection of how well a fund can replicate the index it is following. So, it's a measure of the efficiency of the investment management of the index fund. And like the expense ratio, the lower the tracking error, the better it is. So from the standpoint of these two parameters, I would say that index funds from the fund houses like SBI, UTI, HDFC appear to be doing fairly well.