Best ETFs in India in September 2024 – Based on 5yr CAGR

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Exchange-Traded Funds (ETFs) are investment funds traded on the stock exchanges, similar to individual stocks. These are designed to track the performance of a specific index, sector, commodity, or asset class, offering investors with diversified exposure to a wide range of securities. ETFs mix the features of mutual funds and individual stocks, offering the diversification benefits of a mutual fund with the trading flexibility of a stock.

ETFs have become one of the popular investment choices in India, offering investors a way to diversify their portfolios. These are chosen by investors looking to invest in a broad range of assets. 

With their increasing prominence in the Indian financial market, understanding the range of ETFs available can help investors make informed decisions. In this article, check the best ETFs in India in September 2024, based on their 5-yr CAGR and learn the benefits of investing in them along with the factors to consider while investing. 

Best ETFs in September 2024 – Based on 5yr CAGR

Note: The best ETFs in India provided here are as of September 12, 2024. The ETF Funds are sorted based on the 5-yr CAGR.  

Overview of the 5 Best ETFs in September 2024

• CPSE ETF

Launched on March 28, 2024, the CPSE ETF is from Nippon India Mutual Fund. It is an open-ended index scheme, tracking the Nifty CPSE Index. As of July 31, 2024, the fund’s 3-year CAGR is 58.70%. 

• Nippon India ETF Nifty Midcap 150

Launched on January 31, 2019, the Nippon India ETF Nifty Midcap 150 is from Nippon India Mutual Fund. It is an open-ended index scheme. This ETF from Nippon India Mutual Fund considers Nifty Midcap 150 TRI as its benchmark index. As of July 31, 2024, the fund’s 3-year CAGR is 28.30%. 

• Motilal Oswal Midcap 100 ETF

Motilal Oswal Midcap 100 ETF is an open-ended scheme from Motilal Oswal Mutual Fund. The ETF was launched on January 31, 2011. This is for investors looking to invest in the top 100 Indian midcap companies. This ETF considers Nifty Midcap 100 TRI as its benchmark index. As of July 31, 2024, the fund’s 3-year CAGR is 28.56%. 

• Bharat 22 ETF

Bharat 22 ETF is an open-ended scheme from ICICI Prudential Mutual Fund. The ETF was launched on November 27, 2017. This ETF considers S&P BSE Bharat 22 Index as its benchmark index. The fund’s 3-year return is 39.25%. 

• ICICI Prudential S&P BSE Midcap Select ETF

Launched on July 04, 2016, ICICI Prudential S&P BSE Midcap Select ETF is an open-ended scheme from ICICI Prudential Mutual Fund. This ETF considers S&P BSE Mid-Cap as its benchmark index. The fund’s 3-year return is 21.07%. 

Advantages of Investing in ETFs

• Diversification: ETFs offer exposure to a wide range of securities within a single fund, helping investors achieve diversification without the need to buy individual stocks or bonds.
• Liquidity: ETFs trade on the stock exchanges, letting investors buy and sell shares at any time of the trading day at the market price, similar to individual stocks.
• Cost-Effectiveness: ETFs generally have lower management fees when compared to traditional mutual funds due to their passive management style and lower operational costs.
• Transparency: Most ETFs reveal their holdings on a regular basis, giving investors clear visibility into the underlying assets and the fund’s performance.
• Flexibility: Investors can choose from a comprehensive range of ETFs that track different indices, sectors, etc., enabling them to tailor their investment strategy to their specific goals.

Factors to Consider While Investing in ETFs

• Expense Ratio: The expense ratio reflects the annual fees expressed as a percentage of average assets under management. Lower expense ratios can enhance long-term returns.
• Liquidity: Assess the ETF’s average trading volume and bid-ask spread. Higher liquidity generally means narrower spreads and lower trading costs.
• Tracking Error: This measures how closely an ETF’s performance matches the performance of its benchmark index. A lower tracking error indicates better tracking accuracy.
• Underlying Assets: Review the ETF’s holdings to ensure they align with your investment objectives. Understanding the composition can help you gauge the risk and potential return.
• Performance History: Examine the ETF’s historical performance relative to its benchmark and peer funds to understand its past returns and volatility.
• Fund House Reputation: Consider the credibility and track record of the fund house, as a well-established company is likely to provide better fund management and support.

Conclusion

Remember, while ETFs are accessible investment options, ensuring they fit with your overall strategy and financial objectives is essential for achieving optimal results. With the right approach and informed decisions, ETFs can be a valuable component of your investment strategy.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.