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An analysis done by Cafemutual on index funds shows that at least 7 out of 116 index funds have tracking error of less than or equal to 0.06%.
Tracking error is the annualized difference between the standard deviation of the fund and its benchmark. Lower the tracking difference, better the fund. It’s calculated in percentage.
Navi Nifty 50 Index Fund has the lowest tracking error of 0.01% among large cap index funds followed by Navi Nifty Next 50 Index Fund and HDFC Index S&P BSE Sensex Fund with tracking error of 0.02% and 0.04%.
In the midcap space, Navi Nifty Midcap 150 Index Fund has the lowest tracking error of 0.01%.
SBI Nifty Smallcap 250 Index Fund with 0.07%, ICICI Prudential Nifty Smallcap 250 Index Fund with 0.08% and Nippon India Nifty Smallcap 250 Index Fund with 0.1% were the top three funds in small cap category with the lowest tracking error.
While UTI Nifty Midcap 150 Quality 50 Index Fund has the lowest tracking error of 0.06% in the factor fund category, Navi Nifty Bank Index Fund led the sectoral/thematic index fund category with the lowest tracking error of 0.01%.
In target maturity fund, Bandhan CRISIL IBX Gilt June 2027 Index Fund has the lowest tracking error of 0.11% and Motilal Oswal S&P 500 Index Fund has the lowest tracking error of 0.14% in the international category.
Please note that we have taken regular plan of index funds to do this analysis.
Let us look at the table to know the top three index funds in terms of tracking error:
|
Large Cap |
||
|
Rank |
Scheme Name |
Tracking Error - Regular (%) |
|
1 |
Navi Nifty 50 Index Fund |
0.01 |
|
2 |
Navi Nifty Next 50 Index Fund |
0.02 |
|
3 |
HDFC Index S&P BSE Sensex Fund |
0.04 |
|
Midcap |
||
|
Rank |
Scheme Name |
Tracking Error - Regular (%) |
|
1 |
Navi Nifty Midcap 150 Index Fund |
0.01 |
|
2 |
ICICI Prudential Nifty Midcap 150 Index Fund (Scheme 1) |
0.07 |
|
3 |
Motilal Oswal Nifty Midcap 150 Index Fund |
0.08 |
|
Small cap |
||
|
Rank |
Scheme Name |
Tracking Error - Regular (%) |
|
1 |
SBI Nifty Smallcap 250 Index Fund |
0.07 |
|
2 |
ICICI Prudential Nifty Smallcap 250 Index Fund |
0.08 |
|
3 |
Nippon India Nifty Smallcap 250 Index Fund |
0.1 |
|
Factor |
||
|
Rank |
Scheme Name |
Tracking Error - Regular (%) |
|
1 |
UTI Nifty Midcap 150 Quality 50 Index Fund |
0.06 |
|
2 |
UTI S&P BSE Low Volatility Index Fund |
0.1 |
|
3 |
DSP Nifty Midcap 150 Quality 50 Index Fund |
0.11 |
|
Sectoral/Thematic |
||
|
Rank |
Scheme Name |
Tracking Error - Regular (%) |
|
1 |
Navi Nifty Bank Index Fund |
0.01 |
|
2 |
Navi Nifty India Manufacturing Index Fund |
0.02 |
|
3 |
Motilal Oswal Nifty Bank Index Fund |
0.07 |
|
Target maturity |
||
|
Rank |
Scheme Name |
Tracking Error - Regular (%) |
|
1 |
Bandhan CRISIL IBX Gilt June 2027 Index Fund |
0.11 |
|
2 |
Nippon India Nifty Alpha Low Volatility 30 Index Fund |
0.13 |
|
3 |
Tata CRISIL-IBX Gilt Index - April 2026 Index Fund |
0.19 |
|
International |
||
|
Rank |
Scheme Name |
Tracking Error - Regular (%) |
|
1 |
Motilal Oswal S&P 500 Index Fund |
0.14 |
|
2 |
ICICI Prudential NASDAQ 100 Index Fund |
0.57 |
|
3 |
Edelweiss MSCI India Domestic & World Healthcare 45 Index Fund |
1.11 |
Tracking Difference
Cafemutual has also released a report on tracking difference of 116 index funds.
Tracking difference is simply the difference between returns generated by the fund and its benchmark. Lower the tracking difference, better the fund. It’s calculated in percentage.
In large cap, Bandhan Nifty 100 Index Fund with a tracking difference of -0.23%, UTI Nifty 50 Index Fund with -0.36% and Navi Nifty 50 Index Fund with -0.41% were the top three funds.
Motilal Oswal Nifty Midcap 150 Index Fund, Nippon India Nifty Midcap 150 Index Fund and Aditya Birla Sun Life Nifty Midcap 150 Index Fund have the lowest tracking difference of -1.2, -1.26 and -1.43 respectively in mid cap category.
In small cap, Motilal Oswal Nifty Smallcap 250 Index Fund has the lowest tracking difference of -1.64%, Edelweiss Nifty 100 Quality 30 Index Fund led the factor category with lowest tracking difference of -0.19% and Motilal Oswal Nifty Bank Index Fund has the lowest tracking difference of -1.03 in the sectoral category.
Let us look at the table to know more.
|
Rank |
Scheme Name |
Tracking Difference (1 year) - Regular(%) |
|
1 |
Bandhan Nifty 100 Index Fund |
-0.23 |
|
2 |
UTI Nifty 50 Index Fund |
-0.36 |
|
3 |
Navi Nifty 50 Index Fund |
-0.41 |
|
Mid Cap |
||
|
Rank |
Scheme Name |
Tracking Difference(1 year) - Regular(%) |
|
1 |
Motilal Oswal Nifty Midcap 150 Index Fund |
-1.2 |
|
2 |
Nippon India Nifty Midcap 150 Index Fund |
-1.26 |
|
3 |
Aditya Birla Sun Life Nifty Midcap 150 Index Fund |
-1.43 |
|
Small Cap |
||
|
Rank |
Scheme Name |
Tracking Difference(1 year) - Regular(%) |
|
1 |
Motilal Oswal Nifty Smallcap 250 Index Fund |
-1.64 |
|
2 |
Nippon India Nifty Smallcap 250 Index Fund |
-1.78 |
|
3 |
ICICI Prudential Nifty Smallcap 250 Index Fund |
-1.87 |
|
Factor |
||
|
Rank |
Scheme Name |
Tracking Difference(1 year) - Regular(%) |
|
1 |
Edelweiss Nifty 100 Quality 30 Index Fund |
-0.19 |
|
2 |
Nippon India Nifty AAA CPSE Bond Plus SDL - Apr 2027 Maturity 60:40 Index Fund |
-0.4 |
|
3 |
UTI Nifty200 Momentum 30 Index Fund |
-0.78 |
|
Sectoral thematic |
||
|
Rank |
Scheme Name |
Tracking Difference(1 year) - Regular(%) |
|
1 |
Motilal Oswal Nifty Bank Index Fund |
-1.03 |
|
2 |
Motilal Oswal S&P BSE Financials ex Bank 30 Index Fund |
-1.25 |
|
3 |
Navi Nifty Bank Index Fund |
-1.37 |
|
Target maturity |
||
|
Rank |
Scheme Name |
Tracking Difference(1 year) - Regular(%) |
|
1 |
Edelweiss CRISIL PSU Plus SDL 50:50 Oct 2025 Index Fund |
-0.05 |
|
2 |
Edelweiss NIFTY PSU Bond Plus SDL Apr 2027 50:50 Index |
-0.23 |
|
3 |
Aditya Birla Sun Life CRISIL IBX 60:40 SDL+AAA PSU-Apr 2025 Index Fund |
-0.34 |
|
International |
||
|
Rank |
Scheme Name |
Tracking Difference(1 year) - Regular(%) |
|
1 |
Edelweiss MSCI India Domestic & World Healthcare 45 Index Fund |
-0.85 |
|
2 |
Motilal Oswal MSCI EAFE Top 100 Select Index Fund |
-1.55 |
|
3 |
Motilal Oswal S&P 500 Index Fund |
-1.85 |
