What’s the first challenge that comes to your mind when you think of building a diversified portfolio? For most investors, it’s the extensive research to pick individual stocks from dozens of sectors. However, even beginners are now getting started with a much simpler approach, thanks to index ETFs.
Index investing in the ETF format helps you get exposure to broad market segments or specific sectors through a single investment. These funds, which trade like stocks on the market, track established indices and mirror their performance.
In this blog, we have curated some of the index ETFs that can help you gain exposure to different sectors along with the broad market through a single investment.
Index ETFs that offer diversified market exposure
Whether you’re just getting started with the stock market or are a seasoned investor, you have a wide range of ETFs to choose from. While some of them have been designed to capture the performance of the broader market, others help you gain exposure to specific sectors. As an investor, you just need a single vehicle to ride the growth trajectory of these market segments.
1. Nippon Nifty 50 ETF (NIFTYBEES)
The Nippon Nifty 50 ETF, popularly known as NIFTYBEES, tracks the Nifty 50 index. With this ETF, you gain exposure to some of the largest companies in India. It offers you a simple way to participate in the broader equity market. If you’re looking to invest in established companies to build a core portfolio, this ETF can help you build the foundation.
- Expense ratio: 0.04%
- 1-Year return: – 1.90%
- 3-Year return: 32.58%
- 5-Year return: 61.82%
2. Nippon Nifty IT ETF (ITBEES)
For those looking to ride the growth of the IT sector, the Nippon Nifty IT ETF, or ITBEES, can be a pick. This sectoral ETF helps you get exposure to leading IT companies. Investors with a higher risk appetite may consider including this ETF in their portfolio. You do not have to pick individual IT stocks, as the ETF invests in a basket of companies in the information technology sector.
- Expense ratio: 0.19%
- 1-Year return: -28.3%
- 3-Year return: 0.96%
- 5-Year return: 5.52%
3. SBI Nifty Next 50 ETF
The SBI Nifty Next 50 ETF tracks companies that are just outside the Nifty 50. These businesses carry the potential to emerge as large cap leaders in the future. With this ETF, you can remain invested in companies with stronger growth prospects, sharing similar characteristics with larger, established companies.
- Expense ratio: 0.12%
- 1-Year return: 9.27%
- 3-Year return: 68.68%
- 5-Year return: 94.31%
4. Mirae Asset Nifty Midcap 150 ETF
If you’re looking to invest in the mid-cap sector, the Mirae Asset Nifty Midcap 150 ETF offers exposure to a broad group of companies within this segment from different industries. Mid-cap companies strike a balance between growth potential and stability. Investors can participate in a segment that can benefit from expanding business growth.
- Expense ratio: 0.06%
- 1-Year return: 8.07%
- 3-Year return: 75.84%
- 5-Year return: 123.88%
5. UTI Sensex ETF
The UTI Sensex ETF tracks the Sensex, one of the most widely followed benchmark indices in India. When you invest in this ETF, you can diversify your assets to a basket of established companies from different sectors of the economy. This ETF offers an efficient way to participate in the performance of the broader market.
- Expense ratio: 0.05%
- 1-Year return: -4.60%
- 3-Year return: 24.30%
- 5-Year return: 54.92%
Conclusion
Index ETFs have transformed the way you can access financial markets. The convenience of real-time trading on stock exchanges further makes them popular. In this blog, we have curated five index ETFs representing the broader market and different sectors. Depending on your investment habits and risk appetite, you can choose conservative ETFs like the NIFTYBEES or the UTI Sensex ETF, or go for slightly aggressive ones like ITBEES, SBI Nifty Next 50 ETF, or the Mirae Asset Nifty Midcap 150 ETF. Choose an ETF that aligns with your goals and risk tolerance. These modern instruments simplify the process of building a diversified portfolio, as you do not have to manage numerous individual stocks.
