Top Index Funds in India for Long-Term SIP Investments in 2026

Tired of the long process of choosing mutual funds? Why not switch to Index Funds instead? Index funds in India are the passively managed funds that replicate a market index and invest in the same spot in the same proportion as the index. In the economic space of 2026, investments in the top index funds in India, like ICICI Pru Equity & Debt Fund, UTI Aggressive Hybrid Fund, Nippon India Aggressive Hybrid Fund, etc., can be a great start to your wealth creation.

Did you know that over the past 10 years, 80-88% of active funds fail to beat simple index funds? Maybe it is your time to switch to passive power for reliable returns without the drag. These index funds are perfect for a long-term SIP in India in 2026.

Want to know more about SIPs in these funds? Dive into this detailed guide, where you will get a complete list of the top index funds in India for a long-term SIP with their performance breakdowns, risks and many more things. So, let us begin.

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What are Index Mutual Funds?

Index mutual funds are passively managed investment funds that track & replicate the performance of a specific market index, such as Nifty 50 or Sensex. These Mutual Funds do not rely on a fund manager to do research and actively pick stocks for investments, they just invest in the same stocks in the same proportion as the market index they are tracking.

With its passive strategy, these funds have a lower expense ratio compared to the other actively managed mutual funds, which are usually between 0.2%-0.4%. They give instant diversification across multiple sectors and companies while reducing single-sector risks.

How Index Mutual Funds Work:

Index mutual funds work on a passive investment strategy, where the fund manager's main job is to maintain the portfolio to mirror the index and not to select stocks actively. The fund replicates the index by investing your money exactly where the index did and in the same amount, which makes your fund's value follow the performance of the index closely.

Now, let us look at the list of the top index mutual funds in India for SIP.

Listing Top Index Funds in India for 2026 That are Best for SIP

Here is the list of top performing index funds in India that are best for doing a SIP in 2026:

Fund Name	Category	Launch Date	Minimum SIP Amount
UTI Nifty 50 Index Fund	Equity: Large Cap	06-03-2000	Rs 500
DSP Nifty 50 Equal Weight Index Fund	Equity: Large Cap	01-10-2017	Rs 100
ICICI Pru Nifty Next 50 Index Fund	Equity: Large Cap	05-06-2010	Rs 100
Motilal Oswal BSE Enhanced Value Index Fund	Equity: Strategy	22-08-2022	Rs 500
Nippon India Nifty Midcap 150 Index	Equity: Mid Cap	05-02-2021	Rs 100
Nippon India Nifty Small Cap 250 Index Fund	Equity: Small Cap	10-10-2020	Rs 100
Motilal Oswal Nifty Bank Index Fund	Equity: Sectoral-Banking and Financial Services	05-09-2019	Rs 500
Motilal Oswal Nifty 500 Index Fund	Equity: Broad Market	02-09-2019	Rs 500
ICICI Prudential NASDAQ 100 Index Fund	International	01-10-2021	Rs 100
Motilal Oswal S&P 500 Index Fund	International	05-04-2020	Rs 500

Pro Tip: Use a SIP Calculator and estimate the future returns of your SIP investment easily.

Next, let us review the performance of these top index funds.

Performance Overview of the Top Index Funds in India

Here is the performance overview of the top index funds in India based on their returns:

Fund Name	AUM (crore)	TER (%)	3 Yrs SIP Returns	5 Yrs SIP Returns
UTI Nifty 50 Index Fund	25,748	0.29	12.48%	15.60%
DSP Nifty 50 Equal Weight Index Fund	2,391	0.96	15.68%	19.05%
ICICI Pru Nifty Next 50 Index Fund	8,139	0.68	15.79%	16.81%
Motilal Oswal BSE Enhanced Value Index Fund	1,038	1.1	30.22%	-
Nippon India Nifty Midcap 150 Index	2,031	0.8	21.21%	-
Nippon India Nifty Small Cap 250 Index Fund	2,690	0.95	18.41%	22.64%
Motilal Oswal Nifty Bank Index Fund	647	0.99	11.07%	14.62%
Motilal Oswal Nifty 500 Index Fund	2,662	0.88	14.02%	16.74%
ICICI Prudential NASDAQ 100 Index Fund	2,665	1.07	32.61%	-
Motilal Oswal S&P 500 Index Fund	4,092	1.13	22.59%	17.6%

Must Read: Top 10 Mutual Funds for SIP in 2025: Best Picks to Grow Wealth

In the next heading, let us explore the benefits of placing a SIP in the index funds.

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Benefits of SIP in Index Funds in 2026

SIP in index funds offers several benefits for long-term wealth creation, including rupee cost averaging, compounding, investment discipline, diversification, low cost, convenience and flexibility. With these benefits, the strong economic growth projections of India add a more favourable context for SIP in 2026.

Let us look at some benefits of doing a SIP in index funds in the 2026 economic landscape:

Strong Economic Growth

India's GDP forecast for FY26 is likely to grow to 7.4% and the IMF also sees a strong outlook. Index funds align with the economy, so they are a good investment option in 2026.

Positive Market Sentiment

Global brokerages and investment firms are positive about Indian equities through 2026 and beyond. A SIP lets investors take advantage of this expected rise in the market regularly.

Management of Market Volatility

No matter how positive the 2026 outlook is, market fluctuations are consistent, but SIP is an excellent strategy for navigating these changes and reducing risks with rupee cost averaging.

Expected Earnings Recovery

There is an expectation that corporate earnings will improve across the market in 2026, which is likely to enhance the index mutual fund investments in India.

Broad-Based Sectoral Growth

The economic growth forecast is strong across many areas, including finance, consumer goods and industry. An index fund is well-suited to take advantage of this growth.

Let us understand the essential factors of choosing the best index funds for SIP in 2026 in the next part.

How to Choose the Best Index Funds for SIP

The following are the main factors to consider while selecting the best fund for your SIP in 2026 from the top index funds in India:

Decide exactly what you want from these investments and set a clear goal and risk level.
Search for a fund with a lower expense ratio (around 0.2% or lower) for higher returns over time.
Tracking error measures how closely the fund's performance matches the index, so look for a low tracking error (less than 1%).
Always consider the AUM (Assets Under Management) of the fund. A fund with larger AUM is generally more stable.
Go with the funds that belong to a well-established and reputable AMC (Asset Management Company).
Understand the holdings, sector allocation and other portfolio compositions of the index the fund is tracking.
Do not just look at high returns and decide, also, check the past performance of the fund and the fund manager for consistency.

Pro Tip: Use a Mutual Fund Screener to filter and compare mutual funds for investments.

Now, let us compare the index funds with other investment options to get a clear picture.

Index Funds vs. ETFs vs. Active Funds: A Detailed Comparison

Here is a detailed comparison of index funds with ETFs and active funds for you:

Aspect	Index Funds	ETFs	Active Funds
Management Style	Passive, tracks index	Passive, tracks index	Active stock picking
Expense Ratio	0.10-0.50% (direct)	0.02-0.25%	1-2%
Trading	End-of-day NAV	Intraday-like stocks	End-of-day NAV
Minimum Investment	Rs 100- Rs 500, SIP-friendly	1 unit (~Rs 260-300)	Rs 500-Rs 5,000
Liquidity	High via redemption	Real-time on the exchange	High via redemption
Best For	Long-term SIPs	Lump sums, traders	Outperformance seekers
3Y Returns (Avg)	15-21%	14-20%	12-18%
Taxation (Equity)	12.5% LTCG if cross Rs 1.25L	Same	Same

Also Read: Top 10 Hybrid Mutual Funds: Perfect for Your 2026 Portfolio

In the next part, you will get to learn about the risks involved in index funds and know how to reduce them.

What are the Risks in Index Funds and How to Mitigate Them?

The following are the risks associated with the top index funds in India:

Market Risk

If the market faces a downturn, so will the fund value as these funds replicate the market index.

Tracking Error

It is the slight difference between the returns of the fund & the benchmark index it follows.

Concentration Risk

The market-cap-weighted indices are based on a few large companies and if they do not perform well, it will affect the fund's performance.

Lack of Flexibility

As a passively managed fund, it cannot take actions during market fluctuations and must stick to replicating the index.

Alpha (No Outperformance)

Index mutual funds are designed to match the market, not to beat it. Their goal is to perform in line with the index, rather than exceed its returns.

Here is how you can mitigate the risks mentioned above:

Diversification

Invest in funds across various asset classes or that track different types of indices.

SIP (Systematic Investment Plan)

SIP reduces the risk from market fluctuations by spreading out your purchase price over time.

Long-Term Investment Horizon

These funds are highly suitable for long-term goals (7 years or more), so keep a long-term perspective.

Portfolio Rebalancing

Adjust and shuffle your holdings periodically to maintain your desired asset allocation and risk profile.

Equal-Weighted or Smart Beta Funds

Consider investments in an equal-weighted index fund, which spreads its allocations equally to all index components.

Lastly, let us understand the taxation imposed on the top index funds in India.

Taxation on Index Fund SIPs in India

Here is the description of the tax rates and taxation rules that are imposed on the index funds in India:

Tax Type	Holding/Trigger	Rate/Details	Key SIP Implications
STCG	≤12 months	20% + cess	Newer units
LTCG	>12 months	12.5% (₹1.25L exempt)	Older units
Dividend	Dividend plan	Slab rate; 10% TDS >₹5K	Annual tax hit
STT	Redemption	0.001%	Minor cost
Growth vs Div	Growth defers tax	Growth is better for SIPs	LTCG efficient

Pro Tip: Use a SWP Calculator to plan for your regular mutual fund unit withdrawals.

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Conclusion

To wrap up, index mutual funds are passively managed funds that replicate a market index, providing instant diversification across multiple sectors and companies.

For 2026, the list of top index funds in India includes names like ICICI Pru Equity & Debt, UTI Aggressive Hybrid, Nippon India Aggressive Hybrid, HDFC Hybrid Debt and Nippon India Conservative Hybrid Fund.

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FAQs

1.Which is the best Nifty 50 index fund for SIP in 2026?

SBI Nifty Index Fund Direct-Growth is ideal for stable long-term SIPs tracking the top 50 stocks.

2.What is the minimum SIP amount for index funds in India?

Most top index funds allow SIPs from Rs 100 to Rs 500 monthly, making them accessible for beginners.

3.Should I choose the growth or dividend option for index fund SIPs?

The growth option allows you to postpone taxes until redemption (LTCG benefits), so you avoid dividends as they are taxed at the slab rate and have a 10% TDS if they exceed Rs 5,000.