Analysing Returns on SBI Nifty Index Funds

An open-ended scheme, The SBI Nifty Index Fund is based on the Nifty 50 index. The correct mission of the fund is to be seen as the best example of how the Nifty 50 index is formed and its returns, it can be shown as the best example through a thorough calculation from the SIP calculator online. Being a passively managed index fund, it allows investing in the 50 top blue chip companies of India which are spread across the major sectors. Go into the data of the SBI Nifty Index funds returns offered in the past years.

Analysing the Returns

The stock markets have been changing rapidly in recent years. Besides, the SBI Nifty Index Fund has been able to produce the right amount of returns that are close to the target index. Thus, in one year, this fund has generated a return of 17. The 07% (as of 31 Dec 2021) is in line with the Nifty 50 returns of 17. The most phenomenal thing is that the percentage of people who have accumulated more than 50% in the past year is 54%. The fund has an AUM of more than 3,361 crores under management, which is the reason for its popularity among investors.

If we broaden the period to 3 years, the SBI Nifty Index Fund has given us annualized returns of approximately 16.41% which in turn means total returns of around 59.38% over that time. This is consistent with the Nifty 50 returns of 60% in the same 3-year time span. The fund’s tracking error has been very low which means that the fund manager is good at tracking the underlying index.

The 5 years returns for SBI Nifty Index Fund are 13.09% annualized gains hence the whole 84% returns since December 2016. The Nifty 50 index has increased by 87% during the same 5-year span. Although the fund has not performed as well as the benchmark, the difference is minimal and the tracking is still highly praised.

The 10-year CAGR or the annualized returns for this fund is 10.78% which means the returns are somewhere around 180% over the 10 years. This is just slightly below the Nifty 50 returns of approximately 12% yearly gains in the past decade. On the other hand, the Nifty Index Fund which is an index fund has shown to produce healthy inflation-beating returns for investors over a long span of 10 years.

The index funds usually outperform the market in the bull runs when the market is going up. Nevertheless, they may be a tad bit inferior to actively managed diversified equity funds in the case of market slumps or volatility. Regardless, the long-term performance of SBI Nifty Index Fund is very good with consistent returns that are on the same level as the benchmark. The fund is also a fantastic low-cost route to get exposure to India’s growth story that is reflected in the top 50 blue chip stocks. The expense ratio of 0.09% is a reason for investing in it as a passive investment that is cost-efficient too.

Conclusion

In summary, the SBI Nifty Index Fund has achieved the same long-term returns as the benchmark index returns with a tiny tracking error. Investors who are searching for a low-cost passive way of gaining a foothold in equity markets find this index fund to be a good investment choice. The continuous long-term capital appreciation of the SBI MF makes it the ideal choice for wealth creation throughout the years as India’s economy is expanding.