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Nowadays, several investors prefer investing in financial markets via mutual funds. They pool your money with other investors and give you access to a ready-made basket of stocks, bonds, or other assets. You can even start with an amount of ₹500 and invest monthly through SIPs.
Due to such easier entry and diversification benefits, many investors nowadays are using mutual funds to build the core part of their portfolio. The Nifty 50 Index Fund and Bank Nifty index fund could be two primary index you can consider based on your risk appetite and investment goals.
Want to learn how? In this article, let’s first learn what the Nifty 50 Index Fund and Tata Nifty 50 index funds are. Next, we will study how you can build your core portfolio by investing in Nifty 50, and lastly, see what the Bank Nifty index fund is.
Table of Content
What is the Nifty 50 Index Fund?
A Nifty 50 Index Fund is a mutual fund that tracks and mirrors the performance of the Nifty 50 Index. For those unfamiliar, the Nifty 50 Index is a list of India’s 50 largest companies based on AMFI Market Capitalization.
When you invest in this fund, your money is spread across these 50 companies in the same proportion as they are in the index. It can give you instant diversification because you are investing in multiple top companies at once (without having to buy each stock individually).
Furthermore, your investment value has a direct correlation with the performance of the Nifty 50 index. If the index rises, your investment value increases, and vice versa.
What is Tata Nifty 50 Index Fund? Features, Benefits & Who Should Invest?
What is the Tata Nifty 50 Index Fund?
The Tata Nifty 50 Index Fund, an open ended equity scheme offers Direct as well as Regular Plan having 2 options Growth, IDCW (Dividend) & 2 further sub options under IDCW option – IDCW Reinvestment & Payout. It invests at least 95% of the fund’s money in the same 50 companies that make up the Nifty 50 Index.
The balance is usually kept in money market instruments for short-term needs like paying expenses or managing redemption / withdrawals.
The Tata Nifty 50 Index Fund is managed passively and can suit investors who want exposure to India’s top 50 companies. For your reference, below are some key features of the Tata Nifty 50 Index Fund:
| Particulars | Values |
| Mutual Fund Type | Index Fund |
| Exit Load | 0.25% Exit Load: 0.25 % of the applicable NAV, if redeemed on or before 7 days from the date of allotment |
| Benchmark | Nifty 50 TRI |
| Risk | Very High Risk |
Note: The information mentioned above is valid as of August 13, 2025.
How to Build a Core Portfolio with the Mutual Fund Nifty 50?
You can build your core portfolio using the Tata Nifty 50 index fund. Direct plan has a lower expense ratio compared to a regular growth plan. This difference may seem small, but it can let you accumulate a potentially higher wealth over the long term due to compounding.
Now, you can follow these simple steps to build your core portfolio via the Tata Nifty 50 index fund:
Step I: Decide Your Core Allocation
The Nifty 50 Index mutual fund can serve as the foundation of your equity portfolio. It covers the largest and most liquid companies in India (spread across multiple sectors).
For long-term potential stability, you can build a portfolio following the 80-20 rule (also known as the Pareto principle):
| About 80% of Your Portfolio | The Remaining 20% of Your Portfolio |
| You can allocate about 80% of your equity portfolio to core investments like the Nifty 50 Index mutual fund. | The rest of the 20% can be invested in “satellite” investments such as mid-cap funds or thematic funds. |
Such an approach can make sure that your core is built on companies that have a proven track record. Also, these companies could be less volatile than smaller stocks.
Step II: Choose the Right Investment Mode
You can build your core portfolio via the Systematic Investment Plan (SIP) route. It is suitable for long-term investors because it spreads your purchases over time.
This can also reduce the risk of entering during a market peak.
Furthermore, by investing monthly, you can average out the cost of units (rupee cost averaging). Later, when you have surplus funds during market downturns, you can even add lump sums.
Step III: Rebalance at Regular Intervals
As time progresses, market movements may cause your mutual fund Nifty 50 allocations to drift from your target (say, 90% of total investment). Now, to again match the core allocation percentage (as decided in Step I), you can rebalance e.g. once or twice a year.
For example,
What is the Bank Nifty Index Fund?
Just like the Nifty 50 Index mutual fund invests in Nifty 50 companies, a Bank Nifty Index Fund invests only in the shares of major Indian banks (both public and private) that are tracked by the Nifty Bank Index.
By investing in a fund that tracks / replicates Nifty Bank Index, you can specifically gain exposure to the potential growth of the banking sector (not the broader market).
However, since it focuses only on one sector, it carries a higher risk compared to the Nifty 50 Index mutual fund, which is more diversified. If you consider the Bank Nifty Index Fund as the core investment option in your portfolio, your probable returns can fluctuate when there are:
Conclusion
You can consider the Nifty 50 Index Mutual Fund to build the core of a long-term equity portfolio (after considering your risk appetite). This scheme can give you exposure to India’s largest 50 companies operating in multiple sectors. Also, it offers diversification and carries a lower expense ratio in the direct plans.
Alternatively, you can consider the Bank Nifty Index Fund to build the core. Through it, you can indirectly invest in the top banks tracked by the Nifty Bank Index. However, by doing so, your portfolio can get exposed to the sector-specific risks.
For more information, you can visit www.tatamutualfund.com. The Investor Service Centre of Tata Asset Management Pvt. Ltd. is located at Mulla House, Ground Floor, 51, M.G. Road, Near Flora Fountain, Mumbai – 400 001, Maharashtra. The office hours are Monday to Friday, 9:00 AM to 5:30 PM, and Monday to Saturday, 9:00 AM to 5:30 PM. For assistance, you can also call (022) 6282 7777 or email service@tataamc.com
*Mutual Fund Investments are subject to market risks, please read all scheme related documents carefully.
