Part 13 Complete Guide to ETF Types and How to Choose in India
ETF Investing Made Easy: From Index to International
Part 13 - Complete Guide to ETF Types and How to Choose in India
Exchange-Traded Funds (ETFs) in India are investment vehicles traded on stock exchanges like the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE), designed to track specific indices, commodities, or asset classes.
They combine the diversification of mutual funds with the tradability of stocks, offering cost-effective and flexible investment options.
Below, I’ll outline the main categories of ETFs available in India and provide a detailed guide on how to choose the right ETF
Categories of ETF Funds in India -
ETFs in India are categorized based on the underlying assets or indices they track.
Here are the primary types, based on current market offerings
1. Equity ETFs - Index ETFs
Description:
These ETFs track stock market indices, providing exposure to a basket of equities.
Tracks: A market index (e.g., Nifty 50, S&P 500)
Subcategories:
Broad Market ETFs: Track major indices like Nifty 50 (e.g., Nippon India ETF Nifty 50 BeES), BSE Sensex (e.g., SBI ETF Sensex), or Nifty 100.
Sector/Thematic ETFs:
Tracks: Specific sectors like banking, IT, pharma, energy
Focus on specific sectors like banking (e.g., Nippon India ETF Bank BeES), technology (e.g., ICICI Prudential Nifty IT ETF), or infrastructure (e.g., Nifty Infrastructure ETF).
Market Cap-Based ETFs:
Target large-cap (e.g., Nifty 50 ETF), mid-cap (e.g., Nippon India ETF Nifty Midcap 150), or small-cap (e.g., Groww Nifty Smallcap 250 Index Fund).
Factor/Smart Beta ETFs:
Track indices based on specific factors like low volatility, value, or momentum (e.g., Nippon India Nifty 500 Momentum 50 Index Fund).
Best For: Investors seeking equity market exposure, long-term wealth creation, or sector-specific growth
2. Debt ETFs - Bond/Fixed Income ETFs
Description:
Track bond indices or fixed-income securities, offering income and stability.
Subcategories:
Government Bond ETFs: Track government securities, such as Bharat Bond ETF (invests in public sector bonds with specific maturities).
Liquid ETFs:
Invest in short-term money market instruments or government securities (e.g., Nippon India ETF Liquid BeES).
3. Commodity ETFs
Description:
Track the price of physical commodities, primarily precious metals in India.
Subcategories:
Gold ETFs:
Track domestic gold prices (e.g., Nippon India ETF Gold BeES, SBI Gold ETF).
Silver ETFs:
Track silver prices, a newer offering (e.g., ICICI Prudential Silver ETF).
Best For: Investors seeking inflation hedges or exposure to precious metals without physical ownership. Gold and silver ETFs are the only commodity-based ETFs currently available in India
4. International ETFs
Description: Provide exposure to foreign markets or indices.
Tracks: Global indices or stocks (e.g., Nasdaq, S&P 500)
Examples:
Track indices like NASDAQ 100 (e.g., Motilal Oswal NASDAQ 100 ETF), S&P 500, or Hang Seng.
Best For:
Investors seeking global diversification or exposure to international sectors like U.S. technology. These ETFs involve currency risk due to exchange rate fluctuations.
5. Thematic ETFs
Description: Focus on emerging trends or niche themes.
Tracks: A specific theme like ESG (Environmental, Social, Governance), innovation, electric vehicles
Examples:
Groww Nifty EV & New Age Automotive ETF,
Motilal Oswal Nifty India Defence ETF,
Mirae Asset Nifty 100 ESG Sector Leaders ETF.
Nifty ESG ETF
Best For:
Investors betting on specific growth areas like electric vehicles, defense, or ESG (environmental, social, governance) investing.
6. Inverse ETFs
Description:
Designed to deliver the opposite performance of an index, profiting from declines.
An inverse ETF is a type of exchange-traded fund designed to deliver the opposite performance of a given index or asset.
In simple words, if the index falls by 1%, the inverse ETF aims to rise by 1%. This is why they’re also called bear ETFs or short ETFs.
Unlike traditional ETFs that track the upward movement of indices like the NIFTY 50 or the S&P 500, inverse ETFs are built for traders who expect the market to decline.
They use financial derivatives to short the index — allowing investors to benefit during a market downturn without actually short-selling individual stocks.
A classic example is an S&P 500 short ETF, which rises when the S&P 500 index falls.
Availability:
SEBI Regulations. Currently, the Securities and Exchange Board of India (SEBI) has not approved the use of inverse ETFs in India
Best For:
Short-term traders or hedgers managing downside risk
How to Choose the Right ETF?
Ask yourself these key questions:
1.What is your investment goal?
Wealth creation: Index or international ETFs
Regular income: Bond ETFs
Sector rotation: Sector ETFs
Hedge/inflation protection: Gold/Commodity ETFs
2. What is your time horizon?
Short term (1–2 years): Stick with low-volatility or bond ETFs
Long term (5+ years): Index, sector, or thematic ETFs
3. What’s the ETF’s expense ratio?
Lower is better (especially for index ETFs)
4. What’s the tracking error?
Choose ETFs with low tracking error (closer performance to the index)
5. What’s the liquidity?
Higher daily volume = easier to buy/sell with less impact on price
6. Fund Size (AUM)
Prefer ETFs with a good Asset Under Management (AUM), say ₹500 Cr+ in India
7. Who is the fund provider?
Go with trusted names like Nippon, ICICI, HDFC, SBI, Motilal Oswal, etc.
List of Top ETF Funds in India
Explore the names of some of the top-performing and most reliable ETFs in India.
You can study them further and choose the one that aligns with your financial goals.
If you want detailed information about any specific ETF, feel free to leave a comment —
I'll be happy to help you with in-depth insights and comparisons.
List of Top ETF Funds in India (2025) –
Index ETFs -
Nippon India Nifty 50 ETF
ICICI Prudential Nifty Next 50 ETF
HDFC Sensex ETF
SBI ETF Nifty 50
UTI Nifty 50 ETF
Sectoral ETFs -
Nippon India Bank ETF
ICICI Prudential IT ETF
Motilal Oswal Nifty Financial Services ETF
SBI ETF Nifty PSU Bank
Aditya Birla Sun Life Nifty Pharma ETF
Bond / Debt ETFs -
Bharat Bond ETF – April 2031
Bharat Bond ETF – April 2025
Edelweiss CRISIL IBX Gilt April 2032 ETF
ICICI Pru Nifty G-Sec June 2036 Index ETF
Kotak Nifty SDL Apr 2033 ETF
Commodity ETFs -
HDFC Gold ETF
Nippon India Gold ETF
Axis Gold ETF
ICICI Prudential Gold ETF
Kotak Gold ETF
International ETFs
Motilal Oswal Nasdaq 100 ETF
Navi S&P 500 ETF
ICICI Prudential Nasdaq 100 ETF
Edelweiss MSCI India Domestic & World Healthcare 45 ETF
Mirae Asset NYSE FANG+ ETF
Here's a single consolidated table of the Top ETFs in India (2025) across different categories — including their index/theme, purpose, and key details:
