Nifty Next 50 Index Fund
A Nifty Next 50 Index Fund is a passive mutual fund scheme that tracks the Nifty Next 50 Index (also called the Nifty Junior), comprising the 51st to 100th ranked Indian companies by free-float market capitalisation. The Nifty Next 50 represents the “emerging large caps” segment: companies that have grown past the mid-cap stage but have not yet entered the Nifty 50 top tier. The index is maintained by NSE Indices Limited.
For Indian retail investors, Nifty Next 50 Index Funds offer:
- Emerging large-cap exposure: Companies likely to move into the Nifty 50 over time.
- Higher return potential than Nifty 50: Historically, Nifty Next 50 has outperformed Nifty 50 over long horizons.
- Higher volatility: Reflecting smaller average market cap.
- Low-cost passive structure: TER typically 0.20-0.50 per cent.
This article covers the Nifty Next 50 index methodology, the major funds, the historical performance versus Nifty 50, and the role in retail portfolios.
Index methodology
Composition
The Nifty Next 50 comprises the 50 companies ranked 51st to 100th by free-float market capitalisation. These are typically:
- Established blue-chip companies just outside the top 50.
- Sector leaders in growing industries.
- Companies that have transitioned from mid-cap to large-cap.
Rebalancing
- Semi-annual rebalancing: March and September.
- Promotions to Nifty 50: When a Nifty Next 50 company’s market cap grows enough to enter the top 50, it’s promoted, and another company replaces it in the Next 50.
- Demotions to mid-cap: When a Nifty Next 50 company’s market cap falls below the 100th rank, it moves to the mid-cap index.
Sector composition
Nifty Next 50 sector composition typically differs from Nifty 50:
- Financial Services: ~15-20 per cent (lower than Nifty 50).
- Healthcare/Pharma: ~8-12 per cent (higher than Nifty 50).
- Consumer: ~10-12 per cent.
- Capital goods/Industrials: ~8-12 per cent.
- IT services: ~5-10 per cent.
- Other sectors: balance.
Major Nifty Next 50 Index Funds
- ICICI Prudential Nifty Next 50 Index Fund.
- UTI Nifty Next 50 Index Fund.
- SBI Nifty Next 50 Index Fund.
- HDFC Nifty Next 50 Index Fund.
- Nippon India Nifty Next 50 Index Fund.
- Motilal Oswal Nifty Next 50 Index Fund.
- DSP Nifty Next 50 Index Fund.
- Zerodha Nifty Next 50 Index Fund (from Zerodha Fund House , typically lower TER).
- Mirae Asset Nifty Next 50 ETF.
Historical performance
Versus Nifty 50
Over the past 15-20 years, the Nifty Next 50 has typically outperformed the Nifty 50 by 200-300 basis points annually, reflecting:
- Higher growth profile of the emerging large caps.
- Successful promotions of growing companies into the top 50.
- Greater representation of growth sectors.
This outperformance has been consistent but not guaranteed; specific years have seen Nifty 50 outperform Nifty Next 50.
Versus mid-cap and small-cap
The Nifty Next 50 has typically delivered:
- Higher returns than Nifty 50.
- Lower returns than Nifty Midcap 150 (over very long horizons).
- Lower volatility than mid-cap or small-cap indices.
Role in retail portfolios
Many retail portfolio advisors recommend a Nifty 50 + Nifty Next 50 combination:
- 50% Nifty 50 + 50% Nifty Next 50: Captures both stability and growth.
- 70% Nifty 50 + 30% Nifty Next 50: More conservative with growth tilt.
This combination effectively replicates the Nifty 100 with a flexible weighting.
Comparison with related products
| Dimension | Nifty 50 | Nifty Next 50 | Nifty 100 |
|---|---|---|---|
| Coverage | Top 50 | 51st-100th | Top 100 (50+Next 50) |
| Volatility | Lower | Higher | Average |
| Long-term return | Lower | Higher | Average |
| Sector mix | Heavy financials | Diversified | Combined |
| TER | 0.10-0.30% | 0.20-0.50% | 0.20-0.50% |
Tax treatment
Nifty Next 50 Index Funds are equity-oriented :
- LTCG (>12 months): 12.5 per cent above Rs 1.25 lakh annual exemption under Section 112A .
- STCG (≤12 months): 20 per cent under Section 111A .
See also
- Mutual funds in India
- Index fund India
- Nifty 50 Index Fund
- Nifty 100 Index Fund
- Nifty Midcap 150 Index Fund
- Nifty Smallcap 250 Index Fund
- Nifty LargeMidcap 250 Index Fund
- Large Cap Mutual Fund
- Mid Cap Mutual Fund
- Active vs passive equity in India
- ETF in India
- Equity mutual fund taxation
- Zerodha Fund House
External references
References
- NSE Indices Limited Nifty Next 50 methodology.
- SEBI (Mutual Funds) Regulations 1996.
- AMFI scheme data on Nifty Next 50 index funds.