Future-Proof Your Portfolio: Discover India's Leading ETFs for Smart, Liquid Wealth Building

Siddarth

Exchange-Traded Funds (ETFs) offer a smart, cost-effective way to diversify investment portfolios. They are popular in India, providing an accessible option for investors to build wealth without the complexities of individual stock picking or high mutual fund fees. ETFs cater to various investment profiles and risk appetites, making them suitable for both experienced and novice investors. Their innovative structure makes ETFs an attractive choice for enhancing financial portfolios.

Top Performers and Diverse Options

With hundreds of ETFs available, it’s crucial to understand the different types and some of the top performers in the Indian market.

1. Broad Market ETFs (Betting on the Economy)

These ETFs track broad market segments, offering wide diversification.

a. Nifty 50 ETFs: These funds track the performance of India's 50 largest companies listed on the National Stock Exchange (NSE).

Nifty Bees (Nippon AMC) is highly liquid with daily volumes over 61 lakh units.
It has a low expense ratio of 0.04% and a 5-year return of 22.12%.
Experienced significant intraday falls: 5.38% on June 4, 2024, and 12.45% on April 7, 2025.
Post-COVID returns were around 245%.
Nifty I ETF (ICICI Prudential) tracks the Nifty 50 index with a 5-year return of 22.12%.
It has a slightly lower expense ratio of 0.03% and liquidity of 3.63 lakh units.
On volatile days, it showed intraday falls of 11.3% on June 4, 2024, and 10.46% on April 7, 2025.

b. Nifty Next 50 ETFs: These focus on companies ranked 51-100 on the National Stock Exchange, often representing future market leaders.

SBI ETF Nifty Next 50 tracks the Nifty Next 50 index with NAV of Rs. 794.33.
It has a fund size of Rs. 3077.67 crores and low expense ratio of 0.15%.
Mirae Asset Nifty Next 50 ETF offers exposure to large and mid-cap stocks, NAV at Rs. 764.88.
It has a fund size of Rs. 267.51 crores and a 3-year return of 21.11%.
ICICI Pro's Next 50 I ETF, or Junior Bees, shows annual returns of 23.09% over five years.
Its expense ratio is 0.10%, with better sector allocation than Nifty 50 ETFs.
Recent volumes indicate good liquidity, ranging from 4 lakh to 9 lakh units.
Historically, Junior Bees have outperformed Nifty Bees, with post-COVID returns of around 348%.

c. Midcap ETFs: These are for investors looking at companies with significant growth potential that are past the small-cap stage.

Nippon India ETF Nifty Midcap 150: Launched in January 2019, notable 1-year CAGR of 49.80%.
3-year CAGR is 27.80%, 5-year CAGR at 31.48%, with a low expense ratio of 0.21%.
Good liquidity, trading 12 to 16 lakh units monthly; 3-year return stands at 19.55%.
Motilal Oswal Midcap 100 ETF tracks top 100 mid-cap companies; 1-year return of 47.70%.
Offers a 3-year return of 26.96% and an expense ratio of 0.22%.
Mirae Asset Midcap ETF boasts high liquidity, trading 21 to 59 lakh units monthly.
Lowest expense ratio at 0.05%, with a strong 3-year CAGR of 19.63%.
HDFC Midcap 150 ETF priced around ₹20.
ICICI Pro Midcap I ETF has good liquidity (5 to 11 lakh units) and a 0.15% expense ratio.
Its 3-year return is noted at 19.55%.

d. Smallcap ETFs: Ideal for those seeking high growth from emerging companies.

HDFC SML 250 is a small-cap ETF with high liquidity and a 0.20% expense ratio.
It is preferred for being older and having lower fees.
MOS Small 250 is a newer small-cap ETF with decent liquidity and a 0.30% expense ratio.
Its trading volumes range from 7 lakh to 14 lakh units over 30 days.

2. Sectoral and Thematic ETFs (Targeted Growth): These allow investment in specific industries or emerging themes.

a. Sectoral ETFs: These include options for specific industries.

Auto Bees: Invests in automobile companies, yielding 200% returns since 2022 lows.
Bank Bees: Targets banking sector investments, with 250% returns from recent lows.
IT Bees: Focuses on information technology, achieving 259% returns; part of a diversified portfolio.
Pharma Bees: Invests in the pharmaceutical sector; also part of a diversified portfolio.
Private Bank ADD: An ETF specifically for private banks.
FMCG ETF (FMCG I): Targets Fast-Moving Consumer Goods companies.
Infra ETF: Focuses on infrastructure companies.

b. CPSE Exchange Traded Fund (Nippon India Mutual Fund): The fund tracks the Nifty CPSE index, including 11 public sector enterprises. It provides diversified exposure to government-owned companies, achieving a 5-year CAGR of 35.70% and a 1-year CAGR of 11%. The current NAV is approximately Rs. 98.6338, contributing to a diversified investment portfolio.

Thematic ETFs focus on specific growth areas in the market.
EV ETF (Nifty EV) targets the electric vehicle sector.
Railway ETF is newly launched for railway investments.
Defence ETF allows investment in the defence sector.
Grow's Defence ETF has an AUM of 182 crores.

3. Strategy-Based & Other ETFs (Diverse Approaches)

a. Momentum ETFs: Smart beta ETFs track the NIFTY 200 Momentum 30 index, which outperforms the Nifty 50 significantly. Over 5, 10, and 20 years, the index achieved a total return of 26.10%, compared to the Nifty 50's 11.33% price return and 19.47% annual returns since inception.

HDFC Moment ETF: 0.30% expense ratio, moderate liquidity (1.32-2 lakh units).
Motilal Oswal MO Momentum ETF: 0.30% expense ratio, similar liquidity (1.14-1.58 lakh units).
Both ETFs had negative short-term returns (-9.68% last year) during market downturns.
Long-term performance of the underlying index is strong; suitable for diversified portfolios.

b. Precious Metal ETFs: These provide exposure to commodities.

Gold Bees by Nippon AMC enables gold investment.
Tata Gold is a gold ETF priced around ₹10.
Silver Bees facilitates silver investments.
HDFC Silver ETF offers silver investment for about ₹100.

c. Debt ETFs: For global diversification.

Motilal Oswal NASDAQ 100 ETF allows Indian investors to track the NASDAQ 100 index.
Investment cost is around ₹200.
Debt ETFs provide stable, fixed income options.
Liquid Bees are used for cash parking with fixed income benefits.
Gilt invests in government securities, also ensuring fixed income and diversification.

Addressing a Common Concern: Liquidity

You might come across older information suggesting that ETFs suffer from liquidity issues. However, this is largely an outdated concern, especially for popular ETFs in India. Nifty Bees has a notable AUM of approximately ₹48,000 crores, indicating high liquidity.

Retail investors face minimal liquidity issues with investments ranging from ₹10,000 to ₹10 lakh.
ETFs with AUMs over ₹100 crore generally maintain sufficient liquidity for retail investors.
An AUM exceeding ₹1,000 crore guarantees ample liquidity for larger investments.
Always assess an ETF's AUM and market depth to evaluate liquidity effectively.
Reputable ETFs offer high liquidity, facilitating easy buying and selling transactions.

Conclusion: Your Future, Diversified with ETFs

ETFs present a fantastic and cost-effective avenue for diversification and investment across various sectors and asset classes with minimal effort. With numerous high-performing ETFs available in India, you have a plethora of options to choose from, tailored to your risk tolerance and financial objectives. So go ahead, explore this dynamic investment landscape, and make informed decisions to grow your wealth!