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An analysis done by Cafemutual on index funds shows that 15 out of 140 index funds recorded a tracking error of less than 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 terms.
Among large cap funds, 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 with tracking error of 0.02%.
In the midcap space, Navi Nifty Midcap 150 Index Fund has the lowest tracking error of 0.01%. This was followed by SBI Nifty Midcap 150 Index Fund, ICICI Prudential Nifty Midcap 150 Index Fund with a tracking error of 0.07% each.
SBI Nifty Smallcap 250 Index Fund with 0.06%, ICICI Prudential Nifty Smallcap 250 Index Fund with 0.08% and Motilal Oswal Nifty Smallcap 250 Index Fund with 0.1% were the top three funds in small cap category with the lowest tracking error.
While Nippon India Nifty 50 Value 20 Index Fund has the lowest tracking error of 0.06% in the factor fund category, Navi Nifty Bank Index Fund topped the sectoral/thematic index fund category with the lowest tracking error of 0.01%.
In target maturity fund category, Bandhan CRISIL IBX Gilt June 2027 Index Fund has the lowest tracking error of 0.10% and Motilal Oswal S&P 500 Index Fund has the lowest tracking error of 0.13% 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 |
DSP Nifty 50 Equal Weight Index Fund |
0.05 |
|
DSP Nifty 50 Index Fund |
0.05 |
|
|
ICICI Prudential Nifty 50 Index Fund |
0.05 |
|
|
Motilal Oswal Nifty 500 Index Fund |
0.05 |
|
|
Motilal Oswal Nifty 50 Index Fund |
0.05 |
|
|
Nippon India Index Nifty 50 |
0.05 |
|
|
SBI Nifty Index Fund |
0.05 |
|
|
SBI Nifty Next 50 Index Fund |
0.05 |
|
|
UTI Nifty 50 Index Fund |
0.05 |
|
|
UTI Nifty Next 50 Index Fund |
0.05 |
Mid cap
|
Rank |
Scheme Name |
Tracking Error - Regular (%) |
|
1 |
Navi Nifty Midcap 150 Index Fund |
0.01 |
|
2 |
SBI Nifty Midcap 150 Index Fund |
0.07 |
|
ICICI Prudential Nifty Midcap 150 Index Fund |
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 |
0.06 |
|
2 |
ICICI Prudential Nifty Smallcap 250 Index Fund |
0.08 |
|
3 |
Motilal Oswal Nifty Smallcap 250 Index Fund |
0.10 |
Factor
|
Rank |
Scheme Name |
Tracking Error - Regular (%) |
|
1 |
Nippon India Nifty 50 Value 20 Index Fund |
0.06 |
|
2 |
UTI Nifty Midcap 150 Quality 50 Index Fund |
0.07 |
|
3 |
UTI S&P BSE Low Volatility Index Fund |
0.09 |
Sectoral/Thematic
|
Rank |
Category |
Tracking Error - Regular (%) |
|
1 |
Navi Nifty Bank Index Fund |
0.01 |
|
|
Navi Nifty India Manufacturing Index Fund |
0.01 |
|
2 |
Motilal Oswal Nifty Bank Index Fund |
0.08 |
|
3 |
ICICI Prudential Nifty Bank Index Fund |
0.11 |
Target Maturity
|
Rank |
Category |
Tracking Error - Regular (%) |
|
1 |
Bandhan CRISIL IBX Gilt June 2027 Index Fund |
0.10 |
|
|
Nippon India Nifty G-Sec Sep 2027 Maturity Index Fund |
0.10 |
|
2 |
Bandhan Crisil IBX Gilt April 2026 Index Fund |
0.13 |
|
3 |
Mirae Asset CRISIL IBX Gilt Index - April 2033 Index Fund |
0.15 |
International
|
Rank |
Scheme Name |
Tracking Error - Regular (%) |
|
1 |
Motilal Oswal S&P 500 Index Fund |
0.13 |
|
2 |
ICICI Prudential NASDAQ 100 Index Fund |
0.65 |
|
3 |
Edelweiss MSCI India Domestic & World Healthcare 45 Index Fund |
1.18 |
Tracking difference
Cafemutual has also released a report on tracking difference of 140 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 also calculated in percentage terms.
In large cap category, UTI Nifty 50 Index Fund topped the list with a tracking difference of -0.36%, followed by Navi Nifty 50 Index Fund with -0.40% and UTI S&P BSE Sensex Index Fund with -0.42%.
Nippon India Nifty Midcap 150 Index Fund, Motilal Oswal Nifty Midcap 150 Index Fund, and Aditya Birla Sun Life Nifty Midcap 150 Index Fund have the lowest tracking difference of -1.23, -1.25 and -1.30 respectively in mid cap category.
In small cap, SBI Nifty Smallcap 250 Index Fund has the lowest tracking difference of -1.62%, UTI Nifty 200 Momentum 30 Index Fund led the factor category with lowest tracking difference of -0.82% and Motilal Oswal S&P BSE Financials ex Bank 30 Index Fund topped the sectoral/ thematic category with tracking difference of 0.96%.
Let us look at the table to know more.
Large cap
|
Rank |
Scheme Name |
Tracking Difference (1 year) - Regular (%) |
|
1 |
UTI Nifty 50 Index Fund |
-0.36 |
|
2 |
Navi Nifty 50 Index Fund |
-0.40 |
|
3 |
UTI S&P BSE Sensex Index Fund |
-0.42 |
Mid cap
|
Rank |
Scheme Name |
Tracking Difference (1 year) - Regular (%) |
|
1 |
Nippon India Nifty Midcap 150 Index Fund |
-1.23 |
|
2 |
Motilal Oswal Nifty Midcap 150 Index Fund |
-1.25 |
|
3 |
Aditya Birla Sun Life Nifty Midcap 150 Index Fund |
-1.30 |
Small cap
|
Rank |
Scheme Name |
Tracking Difference (1 year) - Regular (%) |
|
1 |
SBI Nifty Smallcap 250 Index Fund |
-1.62 |
|
2 |
Motilal Oswal Nifty Smallcap 250 Index Fund |
-1.65 |
|
3 |
Nippon India Nifty Smallcap 250 Index Fund |
-1.84 |
Factor
|
Rank |
Scheme Name |
Tracking Difference |
|
1 |
UTI Nifty200 Momentum 30 Index Fund |
-0.82 |
|
2 |
Edelweiss Nifty 100 Quality 30 Index Fund |
-0.89 |
|
3 |
UTI Nifty Midcap 150 Quality 50 Index Fund |
-0.98 |
Sectoral/ Thematic
|
Rank |
Category |
Tracking Difference (1 year) - Regular (%) |
|
1 |
Motilal Oswal S&P BSE Financials ex Bank 30 Index Fund |
-0.96 |
|
2 |
Motilal Oswal Nifty Bank Index Fund |
-1.04 |
|
3 |
ICICI Prudential Nifty IT Index Fund |
-1.09 |
Target Maturity
|
Rank |
Category |
Tracking Difference (1 year) - Regular (%) |
|
1 |
Aditya Birla Sun Life CRISIL IBX Gilt -Apr 2029 Index Fund |
-0.09 |
|
2 |
Edelweiss CRISIL PSU Plus SDL 50:50 Oct 2025 Index Fund |
-0.14 |
|
3 |
Edelweiss CRISIL IBX 50:50 Gilt Plus SDL Sep 2028 Index Fund |
-0.16 |
International
|
Rank |
Scheme Name |
Tracking Difference (1 year) - Regular (%) |
|
1 |
Edelweiss MSCI India Domestic & World Healthcare 45 Index Fund |
-1.33 |
|
2 |
Motilal Oswal MSCI EAFE Top 100 Select Index Fund |
-1.38 |
|
3 |
ICICI Prudential NASDAQ 100 Index Fund |
-1.50 |
