NIFTY 50 on WebNotes

Active equity vs passive equity investing in India

Tue, 12 May 2026 00:00:00 +0000

The active-versus-passive debate in Indian equity investing examines whether actively managed equity mutual funds, where a fund manager selects stocks based on research and conviction, consistently deliver higher risk-adjusted returns than passively managed funds that simply replicate a market index at lower cost.

This article presents the empirical evidence, cost analysis, and structural arguments advanced for each approach in the Indian market context as of 2024.

Definitions

Active equity fund: A fund where a fund manager and research team construct a portfolio of stocks based on fundamental analysis, valuation, sector views, and risk assessments. The fund’s benchmark (e.g., Nifty 50 TRI, Nifty 500 TRI) serves as the reference; the manager aims to generate alpha (return above the benchmark). Cost is higher due to research staff, portfolio management fees, and higher transaction turnover.

How to invest in an index fund via Coin

Tue, 12 May 2026 00:00:00 +0000

An index fund is an open-ended mutual fund scheme that passively replicates the composition and weightings of a market index, such as the Nifty 50, Nifty Next 50, Sensex, or Nifty Midcap 150. The fund manager’s objective is not to outperform the index but to minimise the difference between the fund’s returns and the index’s returns (tracking error). Index funds are low-cost, transparent, and tax-efficient relative to actively managed funds.

Large-cap fund vs index fund in India

Tue, 12 May 2026 00:00:00 +0000

SEBI’s October 2017 categorisation circular mandated that large-cap equity mutual funds invest at least 80% of total assets in equity of large-cap companies, defined as the top 100 companies by full market capitalisation listed on NSE/BSE as per AMFI’s semi-annual ranking. Index funds tracking the Nifty 50 or Sensex invest in the same broad universe (top 50 or top 30 companies by market cap) but use a passive, rules-based replication strategy with no active stock selection.

NIFTY 50 TRI (Total Returns Index)

Tue, 12 May 2026 00:00:00 +0000

The NIFTY 50 Total Returns Index (NIFTY 50 TRI) is the dividend-reinvested variant of the NIFTY 50 index, India’s flagship large-cap equity benchmark. Unlike the price return index (PRI), which tracks only capital appreciation, the TRI assumes that all cash dividends paid by constituent companies are immediately reinvested into the index portfolio on the ex-dividend date. The result is a higher index level over time, providing a more complete measure of the wealth created by holding an index-replicating portfolio. Administered by NSE Indices Limited, a wholly owned subsidiary of the National Stock Exchange of India (NSE), the NIFTY 50 TRI has become the mandatory benchmark for evaluating large-cap equity mutual fund schemes in India following a SEBI circular issued in 2018.

Nifty BeES, India's first exchange-traded fund (2001)

Tue, 12 May 2026 00:00:00 +0000

Nifty BeES (Nifty Benchmark Exchange-Traded Scheme), launched on 28 December 2001 by Benchmark Mutual Fund on the National Stock Exchange of India, was the first exchange-traded fund in India and the first equity-index ETF in Asia. It tracked the Nifty 50 index, with each unit representing one-tenth of the Nifty 50 index value, and was listed and continuously traded on the NSE during market hours at prices close to its net asset value. The launch of Nifty BeES preceded any mainland Chinese or Japanese equity ETF and inaugurated passive index investing as a viable instrument for Indian retail, institutional, and provident fund investors.

National Stock Exchange of India (NSE)

Mon, 11 May 2026 00:00:00 +0000

The National Stock Exchange of India Limited (NSE) is the country’s largest stock exchange by trading volume and the world’s largest derivatives exchange by number of contracts traded in several recent years. Headquartered at the Bandra-Kurla Complex in Mumbai, NSE was incorporated in 1992 and received recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 (SCRA 1956) in April 1993, commencing operations in the wholesale debt market in June 1994 and in the equity cash segment in November 1994.