HDFC Nifty 50 Index Fund vs Nippon India ETF BSE Sensex

Nippon India ETF BSE Sensex and HDFC Nifty 50 Index Fund exhibit a very high 83.73% overlap – ranking in the top 7% of all fund pairs we’ve analysed (pair_rank 687 of 95528). This isn’t surprising, as both aim to replicate broad Indian market returns, but it’s a level that demands attention. The primary driver is a shared focus on large-cap stocks, particularly within the Banking sector which accounts for over 30% of the common holdings.

HDFC Bank, ICICI Bank, and Reliance Industries are key contributors to this significant overlap, representing a substantial portion of both portfolios. While both funds will move in tandem with the overall market, the high correlation means you’re not achieving much diversification benefit by holding both. They are essentially two ways to get very similar exposure.

However, there are differences. HDFC Nifty 50 holds Shriram Finance, Hindalco, and JSW Steel – stocks absent in the Sensex-tracking Nippon fund. Conversely, Nippon has no unique holdings listed. This suggests a slight tilt towards different underlying index compositions, but not enough to drastically alter overall performance.

With such a high overlap, you’re effectively doubling down on the same bets. Consider if you need both, especially given the concentration in a few key stocks and sectors. If your goal is broad market exposure, one fund is likely sufficient.