There are two index funds side by side. One tracks the Nifty 50. The other tracks the Nifty 100. The expense ratios are close. The five-year returns are close. The obvious question is whether the extra fifty companies change anything worth caring about.
They do, but not in the way most people assume.
what is actually inside the nifty 100
The index is built by taking the Nifty 50 and adding the Nifty Next 50. Those are the companies ranked roughly 51 to 100 by market capitalisation on the NSE. They are not small businesses. Several would rank in the top tier of most other markets.
The weight distribution is what matters. The top fifty companies carry about 85% of the index. The next fifty share the remaining 15%. So a Nifty 100 fund is not equal exposure to a hundred companies. It is the Nifty 50, with a tail.
That tail has its own behaviour. The Nifty Next 50 segment has historically moved more like a mid-cap index than a large-cap one. It swings harder in both directions. In strong markets it can outperform the top fifty. In weak markets it falls further.
how the fund mirrors the index
A Nifty 100 index fund does not pick stocks. It buys the index components in the same proportion and holds them until the index changes. The fund is only as good as its ability to track the index closely, minus costs.
Tracking error is the number to watch. Nippon India ETF Nifty 100 reports a tracking error of 0.03%. HDFC Nifty 100 ETF reports 0.02%. A fund with higher tracking error is drifting from the index it claims to follow, and that drift costs the investor over time.
The index rebalances twice a year. Companies that drop below the market cap threshold are removed, and rising companies replace them. This creates a migration effect that is easy to miss. A company that grows large enough to enter the Nifty 50 leaves the Nifty 100’s “next 50” bucket and moves into the top 50. The fund’s composition is never static.
the cost question
Expense ratios across Nifty 100 funds sit in a wide band. Nippon India ETF Nifty 100 charges 0.50%. HDFC Nifty 100 Index Fund charges around 0.75% in the regular plan. Bandhan Nifty 100 Index Fund charges 0.64%. HDFC Nifty 100 ETF sits at 0.30%.
On a ₹10 lakh portfolio, the difference between 0.30% and 0.75% is ₹4,500 a year. Over fifteen years, compounded, it becomes a number that is hard to ignore.
nifty 100 against nifty 50, in practice
The returns over the past five years look almost identical. As of April 2026, the Nifty 100 recorded a 5-year CAGR of 12.21%, while the Nifty 50 recorded 11.69%. Over ten and fifteen-year periods, both indices have tracked close to each other, with the Nifty 100 ahead by a small margin.
So if returns are similar, what changes?
Concentration. In the Nifty 50, the ten largest stocks account for about 54.4% of the fund. In the Nifty 100, the same ten account for around 45%. Put ₹1 lakh into each and the difference becomes concrete: ₹54,400 of your money sits in ten companies in one fund, against ₹45,000 in the other. The Nifty 100 spreads that risk slightly wider.
There is a second effect that shows up over long periods. Because the Nifty 100 includes the Next 50, it captures companies during the phase when they are growing into large-cap status. Some of those will eventually enter the Nifty 50 and become part of the index’s core. A Nifty 50 fund misses that transition. A Nifty 100 fund holds the company through it.
who this actually suits
An investor who wants a single large-cap holding and does not want to run two SIPs. A Nifty 50 fund plus a Nifty Next 50 fund achieves similar exposure, but it requires deciding the split, managing two mandates, and rebalancing. The Nifty 100 does it in one fund.
An investor who wants a slightly wider net than the Nifty 50 but does not want the volatility of a dedicated Next 50 fund. The Nifty 100 dilutes that exposure to 15%, which softens the swings.
It does not suit someone who specifically wants concentrated Next 50 exposure. For that, a dedicated fund is the right instrument. The Nifty 100 will not provide it.
what to check before buying
Look at tracking error first, because it tells you how faithfully the fund is doing its only job. Then look at expense ratio, because it is the one cost you control. Then look at fund size, because a very small AUM fund can face operational constraints that a larger one does not.
Taxation is the same as any equity mutual fund. Gains held over twelve months are taxed at 12.5% above ₹1.25 lakh. Gains held under twelve months are taxed at 20%.
Frequently Asked Questions
1. What exactly is a Nifty 100 index fund?
Think of it as one fund doing the job of two. The Nifty 100 is the Nifty 50 plus the Nifty Next 50, the hundred largest NSE-listed companies by market capitalisation, held in a single scheme.
2. Why would someone pick the Nifty 100 over the Nifty 50?
Not for the returns, because those track closely. The reason is what sits underneath. Ten stocks make up 54.4% of the Nifty 50 but only 45% of the Nifty 100, so the wider index spreads single-stock risk a little further. It also holds companies while they are growing into large-cap status, which a Nifty 50 fund misses entirely.
3. What has the Nifty 100 returned?
Five-year annualised: 16.67%. One-year, as of late 2025: somewhere around 7-8%. Across ten and fifteen years, it runs close to the Nifty 50, a touch ahead.
4. How much does it cost?
Depends which fund. LIC MF Nifty 100 ETF sits at 0.28%. Axis Nifty 100 Index Fund regular plan sits at 0.92%. Put ₹10 lakh in the expensive one and you are paying ₹6,400 more a year than the cheap one, a gap that widens every year you stay invested.
5. What is the tax treatment?
The same as any equity mutual fund. Past twelve months, 12.5% on gains above ₹1.25 lakh. Under twelve months, 20%. Nothing unique applies to index funds.
