ETFs

Best ETF to Invest in India in 2026: How to Choose One

The best ETF for you tracks an index or asset that fits your goal, at low cost, with low tracking error and enough trading volume.

Written by Priya Nair

Updated on 17 September 2026·6 min read

On this page8 sections

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The best ETF to invest in India is the one whose underlying index or asset fits your goal, at a low cost and with enough trading on the exchange to buy and sell near its fair value. No single ETF suits everyone. Choose the type first (equity, gold, silver, debt or international), then compare ETFs that track the same thing on expense ratio, tracking error and liquidity.

Key facts

Item	Position in September 2026
ETFs in India	357 schemes on 31 August 2026 (AMFI)
Assets in ETFs	₹11,96,850 crore on 31 August 2026
Investor folios in ETFs	3.97 crore
Net inflow into ETFs	₹10,161 crore in August 2026
Cost cap	Base expense ratio of up to 0.90% for index funds and ETFs, under the SEBI (Mutual Funds) Regulations, 2026
Tracking error limit	2% a year for all ETFs except debt ETFs; debt ETFs’ average tracking difference capped at 1.25%
What you need	A demat account and a trading account with a broker
Minimum investment	One unit, at the market price

Types of ETF in India, with August 2026 data

AMFI’s monthly report splits ETFs into seven groups. The table shows how much money each held at the end of August 2026, with the two smallest groups combined.

ETF type	Schemes	Assets (₹ crore)	What it holds
Equity ETF	267	8,17,870	Shares in an index such as Nifty 50, Sensex, Nifty Next 50, a sector or a factor index
Gold ETF	26	1,91,166	Physical gold, priced off the domestic gold price
Debt ETF	38	95,324	Government securities, PSU bonds or overnight money market instruments
Silver ETF	19	85,488	Physical silver
ETFs investing overseas	4	6,915	Foreign shares, such as a US index
Other and hybrid ETFs	3	86	Mixed or other assets

Equity ETFs hold about two-thirds of ETF assets. Gold and silver ETFs together took in ₹3,867 crore of net inflows in August 2026, while debt ETFs saw a net outflow of ₹945 crore.

Match the ETF type to your goal

Item	Details
Long-term growth	a broad equity ETF on a large index such as the Nifty 50 or Sensex spreads your money across the biggest listed companies.
Extra equity exposure	mid cap, sector and factor ETFs move more than broad indices. Keep them to a smaller share of your portfolio.
Hedge or diversifier	gold and silver ETFs follow metal prices, not company profits. Our comparison of gold ETFs and digital gold covers the trade-offs, and today’s gold rate page shows the IBJA reference price.
Short-term parking	overnight and liquid ETFs hold very short-term debt, so their value moves little from day to day.
Fixed-maturity debt	target-maturity bond ETFs hold bonds until a set year. Gains are taxed at your slab rate.
Foreign shares	overseas ETFs add exposure to other markets and to the rupee’s exchange rate. Their price can drift from iNAV, so check the gap before you buy.

How to compare ETFs that track the same index

#	Item	Details
1	Check the expense ratio.	It is deducted from the ETF’s assets every day. SEBI caps the base expense ratio of index funds and ETFs at 0.90%; compare the actual figure on each fund house’s website.
2	Check tracking error.	This is the annualised standard deviation of the gap between the ETF’s daily returns and the index’s. SEBI’s rule is that it must not exceed 2% for ETFs other than debt ETFs, and fund houses publish it daily on their websites and AMFI’s.
3	Check tracking difference.	This is how far the ETF’s return lagged the index over 1, 3, 5 and 10 years. It is disclosed monthly and shows the real cost of holding the ETF.
4	Check liquidity.	Look at daily traded value and the gap between buy and sell quotes on the exchange. A thinly traded ETF can cost you more in the spread than you save on fees.
5	Compare price with iNAV.	Exchanges show the indicative NAV during market hours; for equity ETFs it updates within 15 seconds. Avoid paying much above iNAV.
6	Read the scheme documents.	The Scheme Information Document names the index, the market makers and the fund’s risk level on the riskometer.

Every ETF must appoint at least two market makers, who quote prices to keep trading going. Past returns of an ETF only show what its index did, less costs. They do not predict future returns.

How to buy an ETF

Open a demat account and a trading account with a SEBI-registered broker, and complete KYC with your PAN and Aadhaar.
Search the ETF by its exchange symbol on your broker’s app.
Check the iNAV and the latest price before ordering.
Place a limit order for the number of units you want, rather than a market order.
After settlement, the units show in your demat account. Sell them on the exchange the same way.

Since 1 November 2022, only orders above ₹25 crore can be placed directly with the fund house. Retail investors buy and sell on the stock exchange. If you want to invest a fixed amount each month without a demat account, an index fund does the same job; see our page on index funds.

How ETF gains are taxed in tax year 2026-27

From 1 April 2026, gains are taxed under the Income-tax Act, 2025. ETF units are listed, so the long-term cut-off is 12 months.

ETF type	Held 12 months or less	Held more than 12 months
Equity ETF (at least 65% in listed Indian shares)	20%	12.5% on gains above ₹1.25 lakh a year
Debt ETF (more than 65% in debt), bought on or after 1 April 2023	Your slab rate	Your slab rate
Gold, silver, overseas and other ETFs	Your slab rate	12.5%

Surcharge and health and education cess apply on top. Our guide to what an ETF is explains the basics. For advice on which ETF suits you, a SEBI-registered investment adviser charges a fee rather than earning commission.

Frequently asked questions

Which is the best ETF to invest in India?

No ETF is best for everyone. Pick the index or asset that fits your goal, then choose the ETF on that index with the lowest total cost, low tracking error and good trading volume.

Are ETFs good for beginners?

A broad index ETF gives wide diversification at low cost. You do need a demat account and have to place orders yourself, which an index fund does not require.

What is the minimum amount to invest in an ETF?

The price of one unit, plus brokerage and other charges. You can buy more units whenever you like during market hours.

Is an ETF better than an index fund?

ETFs often have lower expense ratios and trade during market hours. Index funds are simpler for monthly SIPs and are bought at NAV, with no bid-ask spread.

How do I check an ETF’s tracking error?

Fund houses must publish it daily on their websites and on AMFI’s website, based on one year of rolling data.

Why does my ETF trade above its NAV?

When demand is high or trading is thin, the market price can move away from the iNAV. Check iNAV before placing a limit order.

Can I buy ETF units directly from the fund house?

Only for orders above ₹25 crore. Smaller investors buy and sell on NSE or BSE through a broker.

Sources

Monthly report for August 2026 — AMFI (checked 17 Sep 2026)
Circular on Development of Passive Funds, 23 May 2022 — SEBI (checked 17 Sep 2026)
Addendum on Development of Passive Funds, 28 Jul 2022 — SEBI (checked 17 Sep 2026)
SEBI (Mutual Funds) Regulations, 2026 — SEBI (checked 17 Sep 2026)
Understanding the Riskometer — SEBI Investor (checked 17 Sep 2026)
Tax Reckoner 2026-27 — HSBC Mutual Fund (checked 17 Sep 2026)

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