What Are The Best ETFs to Invest In India?

Exchange-traded funds (ETFs) are becoming one of the best ways for Indian investors to build a low-cost, diversified portfolio in 2025, especially when combined with stock market trading basics for beginners. The best ETFs in Indian market help both beginners and experienced traders get index-level returns with less effort, lower costs, and better transparency compared to many active mutual funds.​​

What are ETFs?

An exchange-traded fund (ETF) is a basket of securities that trades on the stock exchange just like a stock. In India, most ETFs track popular indices such as Nifty 50, Sensex, Bank Nifty, or specific sectors, giving you diversification in a single trade.​ETFs have a fund manager, but their main job is to mirror an index rather than pick individual stocks. Because of this passive approach, ETFs usually have lower expense ratios, making them attractive for cost-conscious investors looking for the best ETF in india for long-term wealth creation.​

How ETFs Work In India

ETFs are listed and traded on exchanges like NSE and BSE during market hours, and investors can buy or sell them through any regular trading and demat account. The price of an ETF fluctuates during the day based on demand, supply, and the value of the underlying index or assets.​Market makers and authorized participants help keep the ETF price close to its net asset value (NAV) by creating or redeeming units when needed. This mechanism helps maintain liquidity, especially in popular index ETFs tracking benchmarks such as Nifty 50 and Sensex.​

Benefits Of ETFs For Beginners and Long-Term Investors

For beginners, ETFs offer an easy way to invest in a broad index instead of trying to pick individual stocks, which reduces concentration risk. Long-term investors benefit from lower costs, automatic diversification, and the power of compounding when they hold these funds for many years.​Key benefits include:

• Lower expense ratios compared to many actively managed mutual funds.​
• High transparency because ETF portfolios are usually disclosed regularly.​
• Real-time trading flexibility with live prices.​
• Access to different asset classes like equity, debt, gold, and international markets through one platform.​

The ETF segment in India has grown rapidly over the last few years, driven by retail and institutional investors. As more investors look for passive strategies and index investing, ETF assets under management (AUM) have increased across equity, debt, and gold categories.​Regulators and exchanges have also launched new index benchmarks and categories, which have led to more options and competition among ETF providers. This expansion has made the best ETFs in Indian market more accessible even to small investors with modest capital.​

Why Invest in ETFs in 2025?

In 2025, investor interest in passive investing is at an all-time high as many large-cap index funds and ETFs have beaten or matched active funds after costs. This makes ETFs an attractive choice for those seeking market-linked returns without active stock-picking.​

Rising Demand For Passive Investing

Many investors now prefer simple, rules-based investing strategies instead of trying to time the market. Index ETFs tracking Nifty 50, Sensex, and Bank Nifty have seen strong inflows, showing the growing trust in passive products.​ETFs also suit salaried individuals and beginners who may not have time to research stocks but still want to participate in equity markets. This shift in behaviour supports the increasing popularity of best ETFs in india options across categories.​

ETFs Vs Mutual Funds

While mutual funds offer SIPs and active management, ETFs provide better intraday liquidity and often lower costs. Studies and category data show that many index ETFs deliver returns very close to their benchmarks with minimal tracking error, especially in large-cap spaces.​For investors who want to keep expenses under control and avoid fund-manager risk, ETFs can be a powerful core holding in the portfolio. However, investors must ensure they choose ETFs with decent AUM and trading volumes to reduce liquidity issues.​

SEBI’s Push And Tax Benefits

SEBI has encouraged transparent pricing, detailed disclosures, and better market-making mechanisms to improve ETF liquidity and investor protection. This regulatory support has helped ETFs evolve as a reliable option for both retail and institutional investors.​Equity ETFs enjoy similar tax treatment as equity mutual funds, including lower long-term capital gains tax rates after the holding period threshold. This makes them tax-efficient, especially for long-term investors building wealth over multiple years.​

Types of ETFs in Indian Market

There are several types of best ETFs in Indian market, each serving a different purpose in your asset allocation. Choosing the right mix can help balance growth, stability, and diversification.​

Equity ETFs

Equity ETFs track equity indices like Nifty 50, Sensex, sector indices, or thematic indices. Examples include:​

• Nifty 50 ETFs for broad large-cap exposure.​
• Sensex ETFs for exposure to the top 30 companies.​
• Sectoral ETFs, such as banking, IT, or PSU ETFs, for focused bets.​
• Thematic ETFs targeting themes like consumption, infrastructure, or PSU enterprises.​

Debt ETFs

Debt ETFs invest in government bonds, corporate bonds, or money market instruments. Some popular categories include gilt ETFs linked to long-term government securities and target duration funds.​These are suitable for conservative investors who want lower volatility compared to equity, along with better visibility of underlying holdings. They also help in building the fixed-income portion of a diversified portfolio.​

Gold ETFs

Gold ETFs invest in physical gold of high purity and track domestic gold prices. These funds allow investors to gain exposure to gold without the hassle of storage or making charges.​Gold ETFs act as a hedge against inflation, currency depreciation, and global uncertainty. Allocating a small portion of the portfolio to gold can reduce overall risk during market volatility.​

International ETFs

International ETFs listed in India offer exposure to global indices like the Nasdaq 100 and the S&P 500. These ETFs invest in international markets either directly or via feeder structures.​Such funds allow Indian investors to participate in growth stories of global technology and consumer leaders without opening foreign accounts. However, they carry currency risk and higher volatility compared to domestic broad-market ETFs.​

Top 10 Best ETFs to Invest in India (2026)

The list below focuses on popular and widely discussed ETFs in 2025, covering equity, gold, debt, and international exposure. These are not recommendations but examples to help you understand different options among the best etfs in Indian market.​

Nifty 50 ETF

Nifty 50 ETFs track the Nifty 50 index, which represents 50 of the largest and most liquid companies in India. Different fund houses offer Nifty 50 ETFs with expense ratios typically in the low range, making them cost-effective core holdings.​These ETFs generally have high AUM and liquidity, and their returns closely follow the Nifty 50 benchmark over the long term. This makes them ideal for beginners who want simple, market-linked growth.​

Sensex ETF

Sensex ETFs mirror the BSE Sensex, which includes 30 leading companies across sectors. Their structure and trading style are similar to Nifty 50 ETFs but based on a different benchmark index.​Sensex ETFs are suitable for investors who prefer the Sensex as their primary market barometer. They provide diversification with the stability of large, established companies.​

SBI ETF Nifty Bank

SBI ETF Nifty Bank focuses on the Nifty Bank index, offering concentrated exposure to major banking stocks. Banking is a key driver of the Indian economy, and this ETF allows investors to participate in that growth through a single instrument.​Because it is a sectoral ETF, the risk is higher than broad-market ETFs, but potential returns can also be higher when the banking cycle performs well. Investors should treat such sector-focused funds as satellite holdings, not the entire portfolio.​

Nippon India ETF Nifty BeES

Nippon India ETF Nifty BeES is one of the oldest and most liquid Nifty ETFs in India. It tracks the Nifty 50 index and has built a strong track record in terms of AUM and trading volumes.​Its long operating history and liquidity make it suitable for investors who value ease of buying and selling. Many investors consider it a convenient way to gain broad equity exposure with low costs.​

HDFC Gold ETF

HDFC Gold ETF provides exposure to gold prices by investing in physical gold of standard purity. It serves as an efficient tool for those who want to hedge their portfolio against inflation and global uncertainty.​This ETF is best used as a diversification and risk-management tool, not as a primary growth vehicle. A moderate allocation, such as 5–10% of the portfolio, suits many investors depending on risk tolerance.​

ICICI Prudential Bharat 22 ETF

ICICI Prudential Bharat 22 ETF invests in a basket of government-linked blue-chip companies across sectors like energy, banking, and infrastructure. It was designed as a disinvestment vehicle but has also become a way to invest in a theme of strategic public-sector enterprises.​Investors gain exposure to a diversified set of large public-sector companies with a single ETF. However, returns can be influenced by government policies and sector cycles, so a long-term horizon is important.​

DSP Liquid ETF

DSP Liquid ETF invests primarily in very short-term money market instruments and debt securities. It aims to deliver low-risk, short-duration returns similar to liquid mutual funds.​This kind of ETF is useful for parking idle cash for short periods while still earning some interest. Risk is relatively lower than equity ETFs, but returns are also moderate.​

Motilal Oswal Nasdaq 100 ETF

Motilal Oswal Nasdaq 100 ETF provides exposure to the Nasdaq 100 index, which includes leading global technology and growth companies. It allows Indian investors to participate in the performance of major international stocks in one fund.​The ETF currently has a large AUM and a moderate expense ratio compared to global funds in India. Because it invests in foreign equities, it carries higher volatility and currency risk, so investors should allocate carefully.

​Kotak Nifty Next 50 ETF

Kotak Nifty Next 50 ETF gives exposure to the Nifty Next 50 index, which consists of mid- to large-cap stocks just below the Nifty 50. These companies can potentially become future large caps, offering higher growth but also higher risk.​This ETF suits investors who already hold large-cap index funds and want to add some growth-oriented diversification. A medium- to long-term horizon is recommended due to volatility.

​Axis Nifty 100 ETF

Axis Nifty 100 ETF covers the top 100 companies by market capitalisation, combining Nifty 50 and Next 50 exposure. This broad-based ETF can act as a single, diversified equity holding for many investors.​By blending large and large-mid companies, it offers a balance between stability and growth potential. The risk level is typically “very high,” but diversification across 100 stocks helps reduce company-specific risk.​

Comparison Table of Selected ETFs

Below is a simplified view of some best etfs in Indian market across key factors like category, expense ratio, returns, AUM, and risk.​

How to Invest in ETFs in India

Investing in ETFs is straightforward and similar to buying shares. The main requirement is a demat account and access to a trading platform.​Basic steps:

1. Open a demat and trading account with a broker if you do not already have one.​

2. Search for the ETF’s symbol (for example, a Nifty ETF name) on NSE or BSE within your trading app.​

3. Place a buy order specifying quantity and price (market or limit order)

4. Once executed, ETF units get credited to your demat account, and you can track them like any stock.​

Alternatively, some mutual fund and investment apps offer ETF purchase options where units are bought on your behalf at market prices. SIP-like features may be available through certain platforms that schedule periodic ETF purchases.​

SIP in ETFs

Best ETFs for Beginners vs Advanced Investors

Different investors need different ETFs depending on risk tolerance, time horizon, and experience. It is important to align your choice of best ETFs in Indian market with your financial goals.​For beginners:

Common Mistakes in Stock Trading