Sensex Index ETF Investing Explained

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Posted Dec 19, 2024

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The Sensex Index ETF is a popular investment option in India, and for good reason. It's a low-cost way to gain exposure to the 30 largest and most liquid stocks in the Indian market.

This ETF is designed to track the BSE Sensex, which is a benchmark index that represents the top-performing stocks in India. The Sensex Index ETF invests in the same stocks as the BSE Sensex, giving you direct access to the Indian market.

Investing in a Sensex Index ETF is a great way to diversify your portfolio, as it spreads your risk across 30 different stocks. This can help reduce volatility and increase potential returns over the long-term.

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Understanding Sensex Index ETF

The Sensex Index ETF is a type of exchange-traded fund that tracks the S&P BSE Sensex Index, which is a widely followed benchmark of Indian equity market performance.

It's comprised of the 30 largest and most liquid stocks listed on the Bombay Stock Exchange, making it a representative sample of the Indian market.

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The Sensex Index ETF provides investors with a convenient way to gain exposure to the Indian market without having to individually purchase and track each of the 30 underlying stocks.

By investing in the Sensex Index ETF, you'll essentially be buying a small piece of the entire Indian market, allowing you to benefit from its overall performance.

The fund's performance is closely tied to the S&P BSE Sensex Index, which is calculated and maintained by a third-party provider, making it a transparent and reliable way to track the market.

Investing in Sensex Index ETF

Investing in Sensex Index ETF is a straightforward process. The easiest way to invest in the whole Indian stock market is to invest in a broad market index, which can be done at low cost using ETFs.

There are 3 indices tracked by ETFs on the Indian stock market, besides 2 alternative indices. One of the most popular indices is the BSE Sensex, which is tracked by the SBI BSE Sensex ETF.

Intriguing read: Hong Kong Etfs

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To invest in the SBI BSE Sensex ETF, you'll need a minimum investment of 5,000 rupees, with no minimum additional investment or SIP investment required. You can also withdraw your funds without any restrictions.

The SBI BSE Sensex ETF has a 0% exit load, making it a low-cost investment option. Here are the key details of the SBI BSE Sensex ETF:

DetailValue
Minimum Investment5,000.00
Exit Load0%

The SBI BSE Sensex ETF has a very high riskometer and has provided returns closely corresponding to the total returns of the BSE Sensex since its launch in 2013, with a return of 14.07%.

Stock Investing

Investing in the Indian stock market can be done at a low cost by using ETFs, which track a broad market index.

You'll find 3 indices on the Indian stock market that are tracked by ETFs.

Besides these indices, there are 2 alternative indices available.

Investing in a broad market index is the easiest way to invest in the whole Indian stock market.

Using ETFs allows you to diversify your portfolio and reduce costs associated with individual stock investments.

The 3 indices tracked by ETFs are available on the Indian stock market.

The Cheapest ETF

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You can invest in the whole Indian stock market at a low cost by using ETFs that track broad market indices.

The cheapest India ETFs can be found by looking at their total expense ratio (TER).

According to the data, the top 3 cheapest India ETFs have a TER of 0.19% p.a.

These ETFs are the Franklin FTSE India UCITS ETF, the Xtrackers MSCI India Swap UCITS ETF 1C, and the iShares MSCI India UCITS ETF USD (Acc).

Here's a breakdown of the cheapest India ETFs:

RankETF NameTER (p.a.)
1Franklin FTSE India UCITS ETF0.19%
2Xtrackers MSCI India Swap UCITS ETF 1C0.19%
3iShares MSCI India UCITS ETF USD (Acc)0.65%

SBI BSE Investment

SBI BSE Investment offers a convenient way to invest in the Sensex index. The minimum investment required is ₹5,000.

The scheme is an open-ended fund, allowing you to invest and withdraw your money as needed. It has been launched since March 8, 2013.

The fund's investment objective is to provide returns closely corresponding to the total returns of the BSE Sensex. This is achieved by holding BSE Sensex stocks in the same proportion.

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The fund's benchmark is the BSE Sensex Total Return Index, which means its performance is closely tied to the Sensex. As of the fund's launch, it has returned 14.07%.

The fund's risk level is classified as very high, so it's essential to assess your risk tolerance before investing. There are no exit loads, making it a low-cost investment option.

The fund house behind the SBI BSE Sensex ETF is SBI Mutual Fund.

Discover more: Leveraged Etf Risk

Sensex Index ETF Features

The SBI BSE Sensex ETF is an open-ended fund that was launched on March 8, 2013.

The fund's investment objective is to track the BSE Sensex, which means it holds stocks in the same proportion as the index.

It's worth noting that the fund's returns since launch have been 14.07%.

The fund's risk level is classified as Very High, which means it's not suitable for conservative investors.

The fund's benchmark is the BSE Sensex Total Return Index, which is a good indication of its investment strategy.

Key FeaturesDescription
Launch DateMarch 8, 2013
BenchmarkBSE Sensex Total Return Index
Return Since Launch14.07%
RiskometerVery High

The Best Indices

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There are three main indices for ETFs on India: FTSE India 30/18 Capped, MSCI India, and Nifty 50.

The FTSE India 30/18 Capped index tracks Indian companies with large and medium market capitalisation, with a maximum of 30 percent of the index capitalization for the largest company.

The MSCI India index tracks the leading Indian stocks, with 156 constituents as of November 29, 2024.

The Nifty 50 index tracks 50 stocks from 22 sectors of the Indian economy.

Here's a comparison of the three indices:

Index1 Month Return3 Months Return6 Months Return1 Year Return3 Years Return
Nifty 50-1.82%-3.60%-1.50%12.04%27.65%
FTSE India 30/18 Capped-1.06%-2.41%-1.47%17.64%35.92%
MSCI India-1.51%-4.10%-2.04%17.65%31.94%

These indices have different constituent numbers and market capitalization, which can affect the overall performance of the ETFs tracking them.

Bandhan BSE

Bandhan BSE is not explicitly mentioned in the provided article sections, but we can compare it to SBI BSE Sensex ETF to understand more about Sensex Index ETF Features.

SBI BSE Sensex ETF has a launch date of Mar 08, 2013, and its benchmark is the BSE Sensex Total Return Index.

The SBI BSE Sensex ETF has a return since launch of 14.07%.

Additional reading: S&p 500 Index Total Return Ytd

Asia and Sensex Index ETF

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If you're looking to invest in Asia, you've got options. There are three indices to consider: MSCI AC Asia Pacific ex Japan, MSCI AC Asia ex Japan, and MSCI Emerging Markets Asia.

These indices track equity markets in the Asia and Pacific region, excluding Japan, and have a significant presence of Indian companies. The MSCI AC Asia Pacific ex Japan index has an investment focus of 13.98% in India, while the MSCI AC Asia ex Japan index has a focus of 16.92% in India.

Let's take a look at the number of ETFs available for each index. The MSCI AC Asia Pacific ex Japan index has only one ETF, while the MSCI AC Asia ex Japan index has two ETFs, and the MSCI Emerging Markets Asia index has four ETFs.

Here's a breakdown of the number of constituents in each index: MSCI AC Asia Pacific ex Japan has 1,113 constituents, MSCI AC Asia ex Japan has 1,054 constituents, and MSCI Emerging Markets Asia has 1,010 constituents.

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One ETF that stands out is the iShares MSCI EM Asia UCITS ETF, which has a fund size of 2,893 million EUR and a TER of 0.20% p.a. Another ETF, the Amundi MSCI Emerging Markets Asia UCITS ETF EUR, has a fund size of 766 million EUR and a TER of 0.20% p.a.

Here's a comparison of the 1-year returns of the three indices: MSCI AC Asia Pacific ex Japan has a 1-year return of 16.92%, MSCI AC Asia ex Japan has a 1-year return of 18.97%, and MSCI Emerging Markets Asia has a 1-year return of 19.10%.

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Frequently Asked Questions

Which Sensex index fund is best?

There isn't a single "best" Sensex index fund, as the best option depends on individual investment goals and preferences. Consider exploring the features and performance of each fund listed above to make an informed decision.

What is the return of Sensex index fund?

The HDFC BSE Sensex Index Fund has a 5-year annualized return of 14.56% and a 1-year return of 10.87%.

Krystal Bogisich

Krystal Bogisich

Lead Writer

Krystal Bogisich is a seasoned writer with a passion for crafting informative and engaging content. With a keen eye for detail and a knack for storytelling, she has established herself as a versatile writer capable of tackling a wide range of topics. Her expertise spans multiple industries, including finance, where she has developed a particular interest in actuarial careers.

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