India’s oldest index fund has been completed for 25 years

The UTI Nifty Index Fund, India’s oldest Nifty 50 index fund, will be completed on March 25 this year.

Since its launch in 2000, it has a return of 11.51%, which means a ₹Investments at launch will grow to about 1 million ₹150 million today.

While this return is commendable, positive large funds outperform it over a 25-year period. The average return rate for the large stock category was 12.39%, while the UTI Large CAP Fund (formerly UTI Mastershare) produced a 12.87% return over the same period.

However, this trend has reversed over the past decade. Over the past 10 years, the UTI Nifty Index Fund has provided 10.54%, slightly above the average of the large category 10.33%, and comfortably surpassed the UTI Large CAP Fund, which provides 9.77%.

Over the past five years, the pendulum has tilted towards active conditions, with index funds returning 15.56%, while the average for large categories is 16.11%, and the yield for UTI large CAP funds is 14.71%.

A key factor affecting performance is the Securities and Exchange Commission (SEBI) classification specification for India (SEBI) in 2017. Prior to the implementation of these rules, many people actively managed the Alpha generated by large funds through extensive exposure to medium and small stocks. With the more stringent tasks chosen by stocks, the performance capacity of large funds is reduced, making passive investment more attractive.

The UTI Nifty Index Fund also maintains a low fee ratio, a key factor for long-term investors. Although the cost ratio for a regular plan is 0.25%, the cost ratio for a direct plan is 0.17%. These low costs help investors retain higher returns than funds with higher active administrative expense ratios.

Over the years, investors’ participation in the fund has grown. Currently, the fund has 850,000 investors, and the total number of investors since its inception is 1.25 million. However, only 2,700 investors have invested in the fund since the beginning, highlighting the long-term wealth creation challenge.

“Customers are under pressure to make the wrong choices and sometimes choose not to choose completely when facing too many choices. This is where the Nifty 50 index fund comes from – it is simple, diversified, easy to understand and can take you to your destination,” said the chief investment officer of UTI Book Mutual Fund, who said. The paradox of choice Emphasize the simplicity of index investment.

Subramaniam also stressed that seeking the absolute best investment strategy can sometimes backfire. “Sometimes the best enemies are enough enemies. The beautiful 50 index fund is enough to get you to your destination, and returns 13% in 25 years through a systematic investment plan (SIP). It takes care of a part of the demand, which is a big part of what investors need.”

He used Himalayan road signs as an analogy to compare the fund to reliable financial travel vehicles. “I remembered the sign of ‘the normal speed meets all needs’. That’s what the fund does, and it can meet the basic investment needs of investors. I hope that from now on 25 years, from now on 50 years, from now on 100 years, from now on, it will continue to be a barometer, enabling investors to achieve their financial goals as the times change.”

With passive investment gaining momentum in India, the performance of the UTI Nifty Index Fund has strengthened the case of index funds over the past decade as a viable long-term investment option.