India’s ETF market reached ₹10 lakh crore in AUM by October 2025, with Gold ETFs alone seeing inflows of ₹24,040 crore by January 2026. This growth ETFs as a transparent and efficient investment option for 2026, offering diversification and low costs.
| Rank | ETF Name | Category | 3-Year Return (%) | Expense Ratio (%) | AUM (₹ Cr) |
|---|---|---|---|---|---|
| 1 | SBI ETF Nifty 50 | Equity (Index-tracking) | N/A | 0.04% | 2,12,886 |
| 2 | SBI ETF Sensex | Equity (Index-tracking) | N/A | N/A | N/A |
| 3 | UTI Nifty 50 ETF | Equity (Index-tracking) | N/A | N/A | N/A |
| 4 | Nippon India ETF Nifty BeES | Equity (Index-tracking) | N/A | N/A | N/A |
| 5 | ICICI Prudential Nifty ETF | Equity (Index-tracking) | N/A | N/A | N/A |
| 6 | UTI Sensex ETF | Equity (Index-tracking) | N/A | 0.05% | N/A |
| 7 | Nippon ETF Sensex | Equity (Index-tracking) | N/A | N/A | N/A |
| 8 | CPSE ETF | Equity (PSU) | N/A | N/A | N/A |
| 9 | Nippon India ETF Gold BeES (GOLDBEES) | Commodity (Gold) | N/A | N/A | N/A |
| 10 | Nippon India ETF Liquid BeES | Liquid | N/A | N/A | N/A |
| 11 | Nippon India ETF Nifty PSU Bank BeES | Financial Sector | N/A | N/A | N/A |
| 12 | Tata Silver ETF | Commodity (Silver) | N/A | N/A | N/A |
| 13 | Motilal Oswal NASDAQ 100 ETF | International (US Equity) | N/A | N/A | N/A |
| 14 | SBI – ETF 10Y Gilt | Debt (Gilt) | N/A | 0.14% | N/A |
| 15 | Kotak Gold ETF | Commodity (Gold) | N/A | 0.55% | 12,162 |
These top ETFs offer diverse exposure across equity, commodity, and debt segments, catering to various investor preferences for the 2026 market.
Best Equity ETFs for 2026
Equity ETFs offer diversified exposure to India’s stock market, tracking indices like the Nifty 50 or Sensex. These funds provide broad market access at low costs, making them suitable for long-term wealth creation. As of February 28, 2026, India’s mutual fund industry AUM reached ₹82.03 lakh crore, with ETFs contributing significantly to this growth.
| ETF Name | Benchmark Index | 5-Year Return (%) | Expense Ratio (%) | AUM (₹ Cr) | Key Holdings |
|---|---|---|---|---|---|
| SBI – ETF Nifty 50 | Nifty 50 | 15.6 | 0.04 | 2,12,886 (as of Jan 6, 2025) | India’s 50 largest companies across sectors |
| Nippon India ETF Nifty 50 BeES | Nifty 50 | — | — | — | Largest and most respectable organizations in India across economic sectors |
| UTI Nifty 50 ETF | Nifty 50 Index | — | — | — | India’s 50 largest companies across sectors |
| SBI ETF Sensex | S&P BSE Sensex | — | — | — | India’s benchmark index of 30 leading companies |
| UTI BSE Sensex ETF | BSE Sensex | 14.8 | 0.05 | — | Largest and most respectable organizations in India across economic sectors |
| Nippon India ETF Nifty PSU Bank BeES | Nifty PSU Bank Index | 44.8 | — | — | India’s top public-sector banks |
| CPSE ETF | Nifty CPSE Index | 41 | — | — | India’s largest public-sector enterprises |
| Mirae Asset Nifty Next 50 ETF | Nifty Next 50 | 28 | — | — | Next generation of large-CAP companies |
| Nippon India ETF Nifty IT | Nifty IT Index | — | — | — | Major Indian IT services companies |
| Motilal Oswal Nasdaq 100 ETF | Nasdaq 100 Index | 21.44 | — | — | US technology and innovation-led companies |
| HDFC Nifty50 Value 20 ETF | Nifty 50 Value 20 Index | — | — | — | Undervalued stocks with potential for long-term capital appreciation |
| Nippon ETF Dividend Opportunities | — | — | 0.04 | — | High-dividend-yield stocks |
These equity ETFs offer diverse options for investors, from broad market exposure to sector-specific and thematic plays. Investors should compare expense ratios and tracking errors to align with their investment goals for 2026.
Top Commodity ETFs in India
Commodity ETFs offer exposure to physical assets like gold and silver without direct ownership. As of 2026, Gold ETFs have seen significant inflows, with ₹24,040 crore in January and ₹5,255 crore in February. These ETFs are backed by 99.5% pure physical gold, with around 90-100% of the corpus invested.
| ETF Name | Commodity Tracked | 1-Year Return (%) | 3-Year Return (%) | Expense Ratio (%) | AUM (₹ Cr) |
|---|---|---|---|---|---|
| Nippon India ETF Gold BeES (GOLDBEES) | Gold | Over 51% (as of 2025) | — | 1% (fund charge) | 59,007 |
| ICICI Prudential Gold ETF | Gold | 77.86 | — | — | — |
Gold ETFs like Nippon India ETF Gold BeES offer a safe-haven asset, benefiting from rising gold prices and global uncertainty. Trading in Gold ETFs typically involves a minimum of 1 unit, representing 1 gram of gold.
Thematic & Sectoral ETFs
Thematic and sectoral ETFs in India offer targeted exposure to specific industries or investment themes, allowing investors to capitalize on high-growth areas. The Nippon India ETF Nifty PSU Bank BeES, for instance, delivered a 5-year return of 44.8% as of 2026, focusing on public sector banks.
These ETFs are ideal for investors with a clear market outlook, seeking to diversify beyond broad market indices like the Nifty 50. They provide a cost-effective way to invest in sectors like IT, infrastructure, or specific government enterprises.
| ETF Name | Sector/Theme | 5-Year Return (%) | Expense Ratio (%) | AUM (₹ Cr) | Top Holdings |
|---|---|---|---|---|---|
| Nippon India ETF Nifty PSU Bank BeES | PSU Bank | 44.8 | 0.04 (Nippon ETF Dividend Opportunities) | N/A | SBI, Bank of Baroda, Canara Bank |
| CPSE ETF | Central Public Sector Enterprises (PSU) | 41+ | N/A | N/A | Government-owned companies across energy, power, finance, engineering, resources, industrial segments |
| Nippon India ETF Nifty IT | Information Technology | N/A | N/A | N/A | Major Indian IT services companies |
| ICICI Pru Nifty Infrastructure ETF | Infrastructure | N/A | N/A | N/A | Companies in power, telecom, transport, utilities |
| Nippon India ETF Nifty Bank BeES | Banking | N/A | N/A | N/A | India’s largest and most liquid banking companies |
| Mirae Asset Nifty Next 50 ETF | Nifty Next 50 | ~21 | N/A | N/A | Next generation of large-CAP companies likely to enter the Nifty 50 |
| ICICI Pru Bharat 22 ETF | Bharat 22 Index (CPSEs, SUUTI holdings, Public Sector Banks) | N/A | N/A | N/A | Entities across energy, engineering, finance, defence |
| Nippon ETF Dividend Opportunities | High-Dividend Yield | N/A | 0.04 | N/A | High-dividend-yield stocks |
Thematic ETFs offer concentrated exposure to specific growth stories, but they also carry higher sector-specific risks compared to diversified index funds. Investors should align these ETFs with their long-term investment goals and risk tolerance.
ETF vs Mutual Fund
Exchange-Traded Funds (ETFs) and Mutual Funds are popular investment vehicles in India, each offering distinct features for investors. As of February 28, 2026, India’s mutual fund industry AUM stood at ₹82.03 lakh crore, while ETF AUM reached ₹10 lakh crore by October 2025. Understanding their differences helps in making informed investment decisions.
| Feature | Exchange-Traded Fund (ETF) | Mutual Fund |
|---|---|---|
| Management Style | Passively managed, tracks a market index (e.g., Nifty 50, Sensex) | Actively managed by a fund manager who decides which assets to buy or sell |
| Trading | Traded on stock exchanges (NSE, BSE) during market hours at real-time prices, like stocks | Units are bought and sold at the end-of-day closing NAV |
| Liquidity | High intraday liquidity, can be bought and sold throughout the trading day | Lower liquidity, transactions processed at day-end NAV |
| Expense Ratio | Generally lower expense ratios (typically below 0.5%) due to passive management | Generally higher expense ratios due to active management |
| Demat Account Requirement | Requires a Demat and trading account to trade | Does not necessarily require a Demat account (can be held in statement form) |
| Investment Options | Growing market with diverse options (index, sectoral, commodity ETFs) | Wider range of investment options across asset classes, sectors, and management styles |
| Pricing | Market-determined price, may differ from NAV due to demand/supply | NAV-based pricing, transactions at end-of-day Net Asset Value |
| Taxation (Equity) | STCG (under 12 months): 20%; LTCG (beyond 12 months): 12.5% on gains exceeding ₹1.25 lakh | STCG (under 12 months): 15%; LTCG (beyond 12 months): 10% on gains exceeding ₹1 lakh |
| Taxation (Debt) | Capital Gains taxed as per investor’s income slab, no indexation benefit | Capital Gains taxed as per investor’s income slab, no indexation benefit |
| Transparency | Portfolio holdings disclosed daily, real-time price transparency | Portfolio holdings disclosed periodically (monthly/quarterly) |
| Minimum Investment | Can buy as little as one unit, similar to stocks | Often requires a minimum lump sum or SIP amount (e.g., ₹500) |
| Advisory Fees | Brokerage fees for trading, fund management charges (expense ratio) | Fund management fees (expense ratio), distributor commissions, or direct advisor fees |
ETFs offer cost-efficiency and flexibility for investors seeking diversified exposure to specific indices or sectors. Mutual funds provide a broader range of actively managed strategies and do not always require a Demat account.
How to Invest in ETFs
Investing in ETFs in India requires opening a Demat and trading account, a process similar to trading individual stocks. As of 2026, the Indian mutual fund industry’s Assets Under Management (AUM) reached ₹82.03 lakh crore by February 28, with ETFs gaining significant traction.
Follow these steps to invest in ETFs:
- Complete KYC: Investors must complete their Know Your Customer (KYC) process. This requires a PAN card, Aadhaar card, a bank account with internet banking, and a passport-sized photograph.
- Open Demat and Trading Account: Open a Demat account to hold your ETF units and a trading account to buy and sell them on stock exchanges like NSE and BSE. Several brokers offer integrated Demat and trading services.
- Fund Your Account: Transfer funds from your linked bank account to your trading account. Ensure sufficient balance for your intended ETF purchases and associated brokerage charges.
- Select an ETF: Research and choose an ETF that aligns with your investment goals, risk tolerance, and preferred market exposure. Consider factors like expense ratio, tracking error, and underlying index.
- Place Your Order: Log into your trading account and place a buy order for the chosen ETF during market hours. You can specify the number of units and the price (market order or limit order).
- Monitor and Manage: Regularly track your ETF’s performance through your broker’s dashboard or the exchange websites. Adjust your portfolio as your financial goals or market conditions evolve.
ETFs offer intraday liquidity and price discovery on the exchange, making them accessible for both new and experienced investors in India.
Factors to Consider Before Investing
Selecting the right ETF in India requires evaluating several key factors beyond just past returns. Investors should assess the ETF’s expense ratio, liquidity, and how closely IT tracks its underlying index.
Consider these points before making an investment decision:
- Expense Ratio: ETFs generally have lower expense ratios than actively managed mutual funds. Look for ETFs with expense ratios below 0.5% to maximise your net returns, such as the SBI ETF Nifty 50 at 0.04% (as of 2026).
- Tracking Error: This measures how closely an ETF’s performance mirrors its benchmark index. A smaller tracking error indicates better efficiency and a closer replication of the index’s returns.
- Liquidity: High liquidity ensures you can buy or sell ETF units easily at fair market prices. ETFs with large Assets Under Management (AUM), like the SBI ETF Nifty 50 with ₹2 lakh crore AUM (as of 2026), typically offer better liquidity.
- Underlying Index: Understand the index the ETF tracks. For example, a Nifty 50 ETF provides exposure to India’s 50 largest companies, while a Nifty PSU Bank BeES ETF focuses on public-sector banks.
- Diversification: ETFs offer broad market exposure with a single investment, reducing concentration risk. A Sensex ETF, for instance, diversifies across 30 prominent Indian companies.
- Tax Implications: Equity ETFs held for over 12 months qualify for Long-Term Capital Gains (LTCG) benefits, with gains exceeding ₹1.25 lakh taxed at 12.5% (as of 2026). Debt ETFs are taxed according to the investor’s income slab.
Thoroughly evaluating these factors helps align your ETF choice with your financial goals and risk tolerance.
ETF Taxation in India
ETF taxation in India depends on the asset class and holding period, aligning with broader mutual fund tax rules as of 2026. Equity ETFs held for over 12 months qualify for Long-Term Capital Gains (LTCG) tax at 12.5% on gains exceeding ₹1.25 lakh. Short-Term Capital Gains (STCG) on equity ETFs held under 12 months are taxed at 20%.
Debt ETFs and Gold ETFs are taxed differently, with capital gains added to the investor’s income and taxed according to their income slab. Unlike equity, debt ETFs do not receive indexation benefits for tax purposes. Investors can submit a single no-deduction declaration through the depository, effective April 1, 2027, for listed securities or units held in demat form.
Key Takeaways
- Equity ETFs held for more than 12 months incur 12.5% LTCG tax on gains above ₹1.25 lakh.
- Short-Term Capital Gains (STCG) on equity ETFs held under 12 months are taxed at 20%.
- Debt and Gold ETFs are taxed as per the investor’s income slab, without indexation benefits.
Consult a tax advisor for personalized guidance on ETF taxation based on your specific investment profile.
Frequently Asked Questions (FAQs)
What is an ETF and how does IT work in India?
An Exchange-Traded Fund (ETF) is a basket of investments like stocks or bonds that trades on a stock exchange, similar to a single stock. IT typically tracks a specific index such as the NIFTY 50 or Sensex. In India, ETFs are regulated by SEBI and offer diversification benefits by spreading risk across multiple assets.
How can I invest in ETFs in India?
You can invest in ETFs in India through a demat and trading account with a registered broker. ETFs are bought and sold on stock exchanges like NSE and BSE during market hours at real-time prices. You can monitor your investment performance via your broker’s dashboard or the exchange websites.
What are the best performing ETFs in India for 2026?
As of 2026, top performing ETFs in India include Nippon India Nifty 50 BeES and CPSE ETF for equity exposure, and commodity options like Nippon Gold ETF (GOLDBEES) and Tata Silver ETF. The Nippon India ETF Nifty PSU Bank BeES, for example, has delivered a 5-year return of 44.8% (as per 2025 data).
What are the benefits of investing in ETFs in India?
ETFs offer diversification, allowing exposure to various asset classes, sectors, or entire markets with a single investment, which reduces concentration risk. They are traded on exchanges, providing liquidity and transparency with frequently disseminated indicative NAVs. ETFs also typically have lower expense ratios compared to actively managed mutual funds.
Can I invest in international ETFs from India?
Yes, Indian investors can invest in international ETFs, including US ETFs and US stocks, through platforms like INDmoney. This provides an opportunity for international diversification by tracking global indices such as the Nasdaq 100 Index.
What is the expense ratio for ETFs in India?
ETF expense ratios in India are generally lower than those of actively managed mutual funds, making them a cost-efficient investment option. While specific figures vary by fund, competitive expense ratios are a key feature of many top ETFs like Nippon Nifty BeES and CPSE ETF.
Are Gold ETFs a good investment in India for 2026?
Gold ETFs remain a popular investment choice in India for 2026, offering exposure to gold without the need to hold physical metal. Funds like Nippon Gold ETF (GOLDBEES) and Tata Silver ETF provide commodity diversification. Some gold ETFs have delivered up to 24% returns over three years (as per 2025 data).
Disclaimer: This article is general information, not financial advice. Interest rates, fees, and eligibility change frequently. Verify current details with the lender or regulator (RBI / SEBI) before deciding.