Nifty 50 vs Nifty Next 50 Index Funds: Differences, Returns and How to Choose

Index funds let you invest in a basket of companies without choosing each stock yourself. But the basket you choose matters.

A Nifty 50 index fund and a Nifty Next 50 index fund both provide exposure to large Indian companies. They hold different stocks, give different weights to sectors and can perform quite differently over the same period.

Understanding Nifty 50 vs Nifty Next 50 starts with what each index contains. You can then compare returns, costs and how each fits your investment plans.

What are Nifty 50 and Nifty Next 50?

The two indices divide the Nifty 100 into separate groups of 50 companies:

Nifty 50

The Nifty 50 contains 50 companies selected from the Nifty 100 under NSE Indices’ rules. Selection considers free-float market capitalisation, liquidity and other eligibility requirements.

Free-float market capitalisation measures a company’s value using shares available for public trading, rather than all its outstanding shares. This is why describing Nifty 50 as simply the 50 largest companies by total market value leaves out part of the selection process.

Nifty Next 50

The Nifty Next 50 contains the 50 companies in the Nifty 100 after excluding Nifty 50 constituents. Some companies may later enter Nifty 50 if they meet its selection rules. That is a possibility, rather than a promised progression for every company. Both indices are reviewed periodically, so their constituents can change.

Source: NSE Indices, Equity indices methodology, September 2026.

What are index funds?

An index fund is a mutual fund that aims to follow a specified index. It generally invests in the index’s stocks in approximately the same proportions.

For example, a Nifty 50 index fund follows Nifty 50, while a Nifty Next 50 index fund follows Nifty Next 50.

The fund manager maintains the portfolio as the index changes, rather than selecting stocks with the aim of beating it. Expenses, cash balances and transaction timing can still create a difference between fund and index returns.

Key differences between Nifty 50 and Nifty Next 50 index funds

The main difference is the basket of companies each fund follows:

A fund tracking Nifty Next 50 is not automatically better because its companies are outside Nifty 50. Equally, a Nifty 50 fund does not offer fixed or assured returns because it holds larger companies.

Sources: NSE Indices, Nifty 50 factsheet, Nifty Next 50 factsheet and September 2026 index dashboard.

Nifty 50 vs Nifty Next 50 returns

For a useful Nifty 50 vs Nifty Next 50 returns comparison, use the same ending date, investment period and type of index. The following figures use Total Return Indices, or TRI, which account for dividends being reinvested:

The one-year figures show the total change over that year. The three-year and five-year figures show compounded annual growth rates, or CAGR.

Nifty Next 50 delivered higher returns across these particular periods. However, that does not establish a permanent advantage.

These are index returns, not the returns of a particular mutual fund. An actual fund’s results also reflect its expenses and tracking.

Source: NSE Indices, September 2026 index dashboard.

How do calendar-year returns compare?

Calendar-year returns help show how leadership can change:

Nifty Next 50 led in 2024, while Nifty 50 led in 2025. Choosing only the year that favours one index can give an incomplete picture.

For a broader comparison, examine several holding periods. Rolling returns can also help because they compare many overlapping investment periods rather than relying on one starting date.

Sources: NSE Indices, December 2024 index dashboard and December 2025 index dashboard.

Past performance may or may not be sustained in future.

Sector exposure: Nifty 50 vs Nifty Next 50

Two funds can hold different companies while investing in some of the same sectors. The weight given to each sector helps explain why their performance differs.

Here is a snapshot of selected sector weights as of 30 September 2026:

At this date, Nifty 50 had a larger financial services allocation, while Nifty Next 50 had greater exposure to capital goods and power. These are selected sectors, so the rows do not add up to 100%. The weights also change with share prices and index reviews.

Sources: NSE Indices, Nifty 50 factsheet and Nifty Next 50 factsheet, dated 30 September 2026.

Please note that the reference to any industry/sector/stock is provided for illustrative purposes only. This should not be construed as a research report or a recommendation to buy or sell any security or sector.

Why does Nifty Next 50 fluctuate more?

Nifty Next 50 has generally shown greater price fluctuations than Nifty 50. Its company mix, sector weights and response to changing business expectations can produce a different investment experience.

For the year ending 30 September 2026, NSE Indices reported annualised TRI volatility of 17.10% for Nifty Next 50, compared with 13.46% for Nifty 50.

Volatility measures how widely returns fluctuate. It is not a forecast of how much an investment will rise or fall.

The difference does not mean Nifty Next 50 must fall more in every market decline. It means investors should be comfortable with its history of larger movements.

Bajaj AMC’s current disclosures classify both Bajaj Finserv Nifty 50 Index Fund and Bajaj Finserv Nifty Next 50 Index Fund as Very High risk. Comparatively lower volatility does not make Nifty 50 a low-risk investment.

Sources: NSE Indices, September 2026 index dashboard; Bajaj AMC, current Riskometers on the official pages for Nifty 50 Index Fund and Nifty Next 50 Index Fund.

Is Nifty Next 50 a large cap or midcap index?

Nifty Next 50 is a large cap index, not a midcap index. It belongs to the Nifty 100 universe.

Under SEBI’s mutual fund classification, large cap entities rank 1–100 by full market capitalisation, midcaps rank 101–250 and smallcaps rank 251 onwards. Index construction follows its own eligibility and review rules, so these classifications should not be used as a substitute for checking an index’s methodology.

The main Nifty baskets represent these segments:

A large cap label does not mean all these companies behave alike. Nifty Next 50 can experience substantial fluctuations while remaining a large cap index.

Sources: SEBI, Master Circular for Mutual Funds, March 2026, section 3.9; NSE Indices, Nifty Midcap 150 and Nifty Smallcap 250.

Which index fund should you choose?

Start with the exposure you want and the money you can leave invested for a long-term goal.

When a Nifty 50 index fund may fit

A Nifty 50 index fund may suit you if you want:

• Exposure to the Nifty 50 basket through one investment.
• A passive approach without selecting individual shares.
• An equity allocation that has generally fluctuated less than Nifty Next 50.

When a Nifty Next 50 index fund may fit

A Nifty Next 50 index fund may suit you if you want:

• Exposure to large cap companies outside Nifty 50.
• A different company and sector mix within your equity investments.
• An investment you can hold while accepting larger price movements.

Neither choice should be based only on which index recently performed better.

What to check in the actual fund

After choosing the index, compare the funds tracking it:

• Expense ratio: The ongoing cost charged to the scheme.
• Tracking difference: The return gap between the fund and its benchmark.
• Tracking error: How much the difference between daily fund and benchmark returns varies.
• Plan and option: Compare corresponding plans and options.
• Scheme terms: Check the minimum investment, exit load and current Riskometer.

Tracking error and tracking difference answer different questions. A fund can follow its index consistently while still delivering a lower return because of costs.

Source: SEBI, Master Circular for Mutual Funds, March 2026, section 4.5.4, covering tracking error and tracking difference.

Can you invest in both?

Yes. The two indices have separate constituents, so investing in both broadens your exposure across the Nifty 100 companies. However, they can still move in the same direction because both invest in Indian equities. Combining them does not automatically reduce every type of risk.

Also check your existing funds. A Nifty 100 fund already includes both groups, and an actively managed equity fund may hold many of the same companies.

There is no allocation that suits everyone. Choose the mix according to your goal, time available and existing portfolio rather than dividing the money equally by default.

Source: NSE Indices, Equity indices methodology, defining Nifty 100, Nifty 50 and Nifty Next 50.

Index fund vs ETF: which format should you choose?

Both formats can track Nifty 50 or Nifty Next 50. The main difference is how you transact:

An index mutual fund may be convenient if you prefer an automated SIP. An ETF may fit if you already use a trading account and are comfortable placing exchange orders.

Source: AMFI, Understanding Mutual Funds investor booklet, covering ETFs and mutual fund transactions.

Common mistakes to avoid

Keep these points in mind while comparing Nifty 50 vs Nifty Next 50 index funds:

• Choosing only by recent returns: A strong year does not establish a permanent winner.
• Treating Nifty 50 as a fixed-return investment: Its value changes with the underlying shares.
• Assuming every Next 50 company will enter Nifty 50: Inclusion depends on the index rules.
• Adding funds without checking overlap: Different fund names can still lead to similar holdings.
• Looking only at the expense ratio: Tracking quality also affects the result.
• Confusing index CAGR with SIP returns: An SIP invests on several dates, so its outcome differs from a single investment made at the start of the period.

Start index investing with Bajaj AMC

You do not need to buy and manage 50 individual shares to invest in either basket. Bajaj Finserv Nifty 50 Index Fund and Bajaj Finserv Nifty Next 50 Index Fund bring these approaches to you through mutual fund units.

Choose the Nifty 50 fund for exposure to its selected large cap basket or explore the Nifty Next 50 fund for a different group of large cap companies. Each scheme seeks to follow its respective Total Return Index, subject to tracking error.

You can start an SIP from ₹500, subject to the current minimum-instalment requirements, or make a one-time investment under the scheme’s terms. Both offer Direct and Regular plans, with Growth and IDCW options.

Explore the funds on Bajaj AMC’s website, compare their features and choose the plan and option that fit your goal. Once the required KYC formalities are complete, you can invest through Bajaj AMC’s online investment facility.

Both schemes currently carry a Very High Riskometer classification, so they are intended for investors comfortable with equity-market fluctuations.

Sources: Bajaj AMC, official scheme pages and investment terms for Bajaj Finserv Nifty 50 Index Fund and Bajaj Finserv Nifty Next 50 Index Fund.

Conclusion

The Nifty 50 vs Nifty Next 50 index fund decision starts with the companies you want to own. Returns matter, but they make more sense alongside sector weights, price fluctuations and fund costs.

Nifty 50 provides one large cap basket, while Nifty Next 50 provides another. Choose either or combine them according to your long-term goal and existing investments, rather than expecting one index to lead in every market cycle.

FAQs

Which is better for an SIP: Nifty 50 or Nifty Next 50?

An SIP is a way of investing regularly, rather than a separate investment strategy. Either fund can be used for an SIP where the facility is available. Choose the underlying basket according to your goal and comfort with fluctuations; investing monthly does not remove equity risk.

Can Nifty Next 50 replace Nifty 50 in my portfolio?

It can change your allocation, but it is not an equivalent replacement. You would own a different set of companies with different sector weights and performance patterns. Review the role of the investment before switching.

Does a 50:50 mix replicate Nifty 100?

No. Holding both gives exposure to the two groups, but an equal allocation does not generally reproduce Nifty 100’s stock weights. Matching the companies and matching their proportions are different things.

Is Nifty Next 50 itself an index fund?

No. Nifty Next 50 is an index. An index fund or ETF is an investment product that seeks to follow it.

Does a lower NAV make one index fund cheaper?

No. A lower NAV gives you more units for the same amount but does not by itself make the investment better value. Compare the underlying index, costs and tracking quality rather than the unit price.

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