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 is 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 and is one of the most-tracked broad-market spokes of the index-fund cluster .

For Indian retail investors, a Nifty Next 50 index fund offers emerging large-cap exposure to companies likely to move into the Nifty 50 over time, a higher long-run return profile than the Nifty 50 with higher volatility, and a low-cost passive structure with direct-plan TER typically 0.20 to 0.50 per cent. This article covers the index methodology, the available funds with their TER, the Nippon India option, the price-return versus total-return distinction, the historical performance versus the Nifty 50, and the role in a retail portfolio.

Index methodology

Composition

The Nifty Next 50 holds the 50 companies ranked 51st to 100th by free-float market capitalisation, the band just below the Nifty 50. These are typically established blue chips outside the top 50, sector leaders in growing industries, and companies that have recently transitioned from mid-cap to large-cap. Together the Nifty 50 and the Nifty Next 50 make up the Nifty 100 .

The “junior” tag is literal: SEBI’s large-cap definition counts the top 100 companies by market capitalisation as large caps, so the Nifty Next 50 is entirely large-cap, not mid-cap. It is the second tier of large caps rather than a mid-cap proxy, which is the most common misunderstanding of the index.

Rebalancing

The index rebalances semi-annually, in March and September. When a Nifty Next 50 company’s market cap grows enough to enter the top 50, it is promoted to the Nifty 50 and another company replaces it. When a constituent falls below the 100th rank, it drops to the mid-cap index . This higher turnover than the Nifty 50 is one source of the fund’s tracking difference .

Sector composition

The Nifty Next 50 sector mix differs from the Nifty 50: financial services run lighter, at roughly 15 to 20 per cent against the Nifty 50’s heavier bank and finance weight, while healthcare and pharma, consumer, and capital goods run heavier. The lower financials weight and broader sector spread are why the two indices diverge in individual years.

Available Nifty Next 50 funds

Several AMCs run an open-ended Nifty Next 50 index fund tracking the same index, so they hold the same 50 stocks; the deciding factors are TER, tracking difference and fund size, not stock selection. The oldest is the ICICI Prudential Nifty Next 50 Index Fund, launched in June 2010, which also holds the largest AUM in the segment. The table lists the open-ended index funds tracking the index.

The TER figures are direct-plan bands; confirm the exact ratio and the AUM on the AMC factsheet and on AMFI before choosing, since both change at each disclosure cycle.

Nippon India Nifty Next 50 option

Nippon India does not run a plain Next 50 index fund. Its Next 50 exposure is the Nippon India Nifty Next 50 Junior BeES FoF, an open-ended fund of funds launched on 8 March 2019 that invests in the Nippon India ETF Nifty Next 50 Junior BeES, the listed ETF tracking the index. The FoF wrapper lets an investor buy the Junior BeES ETF exposure through the regular SIP and lump-sum route without a demat account, at a direct-plan TER near 0.13 per cent. The Junior BeES ETF itself, which dates back to 2003, is the oldest Nifty Next 50 product in India and trades on the NSE for investors who hold a demat account.

For a demat-route alternative, the Mirae Asset Nifty Next 50 ETF and the Junior BeES ETF both trade on the exchange. Index funds suit investors who prefer SIPs and have no demat account; the ETFs suit those who already trade and want an intraday-priced unit.

Price return versus total return

A Nifty Next 50 index fund should be judged against the total-return variant of the index, not the price-return variant. The price-return index counts only the price change of the constituents; the total-return index also reinvests the dividends those companies pay. The fund itself receives and reinvests those dividends, so comparing the fund’s return against the price-return index flatters it by the full dividend yield, often 1.0 to 1.5 per cent a year. SEBI requires schemes to benchmark against the total-return index for this reason. When reading a fund’s tracking difference , confirm it is measured against the total-return index , since that is the honest yardstick.

Historical performance

Versus the Nifty 50

Over long horizons the Nifty Next 50 has historically returned more than the Nifty 50 , reflecting the higher growth profile of the emerging large caps, the successful promotion of growing companies into the top 50, and the heavier weight of growth sectors. The outperformance has been persistent over rolling long periods but not guaranteed, and individual years have seen the Nifty 50 lead, usually when large-cap financials and IT, which dominate the Nifty 50, run ahead of the broader large-cap field.

Versus mid-cap and small-cap

The Nifty Next 50 typically delivers more than the Nifty 50, less than the Nifty Midcap 150 over very long horizons, and with lower volatility than mid-cap or small-cap indices. It sits between large-cap stability and mid-cap growth.

Role in retail portfolios

Many advisers pair the Nifty 50 with the Nifty Next 50: a 50:50 split captures stability and growth, while a 70:30 tilt stays more conservative. Either combination roughly replicates the Nifty 100 with a chosen weighting, which is why some investors hold a single Nifty 100 fund instead. The active-versus-passive and large-cap-versus-index-fund articles weigh this against an actively chosen fund.

Comparison with related products

Tax treatment

A Nifty Next 50 index fund is equity-oriented . Long-term gains on units held over 12 months are taxed at 12.5 per cent above the Rs 1.25 lakh annual exemption under Section 112A ; short-term gains within 12 months at 20 per cent under Section 111A , the rates effective for transfers on or after 23 July 2024 per the Finance (No. 2) Act 2024. The capital-gains overview holds the full schedule.

See also

• Index funds in India
• Mutual funds in India
• Nifty 50 Index Fund
• Nifty 100 Index Fund
• Nifty 500 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
• Large cap vs index fund
• Active vs passive equity in India
• Exchange-traded funds in India
• Nifty 50 ETF
• Nifty BeES
• Index fund vs ETF in India
• Tracking difference in index funds
• Tracking error in index funds
• How to select an index fund
• Nifty 50 (the index)
• Nifty 500 total return index
• ICICI Prudential Mutual Fund
• UTI Mutual Fund
• SBI Mutual Fund
• HDFC Mutual Fund
• DSP Mutual Fund
• Axis Mutual Fund
• Motilal Oswal Mutual Fund
• National Stock Exchange
• AMFI
• Equity mutual fund taxation
• LTCG on equity (Section 112A)
• STCG on equity (Section 111A)
• Capital gains tax in India
• Zerodha Fund House

External references

• NSE Indices Nifty Next 50
• AMFI mutual fund data
• SEBI

References

1. NSE Indices Limited, Nifty Next 50 index methodology.
2. SEBI (Mutual Funds) Regulations 1996.
3. AMFI scheme data on Nifty Next 50 index funds.