Zerodha Fund House launches BSE SENSEX Index Fund -- a new low-cost route to India’s top 30 companies

Zerodha Fund House has announced the launch of its latest offering — the Zerodha BSE SENSEX Index Fund, an open-ended equity scheme designed to mirror the performance of the BSE SENSEX Index, India’s oldest and most widely tracked benchmark. The New Fund Offer (NFO) opens on October 20, 2025, and closes on November 3, 2025, with units to be allotted on November 6. The fund will reopen for continuous subscriptions and redemptions from November 10.

The scheme aims to replicate the SENSEX by investing primarily in equities and equity-related securities that form part of the 30-stock index, subject to tracking errors. The BSE SENSEX comprises some of India’s largest, most liquid, and financially sound companies across key sectors — offering investors a broad-based representation of the Indian economy.

Announcing the launch, Vishal Jain, CEO of Zerodha Fund House, said the new fund offers investors a simple and transparent way to gain exposure to India’s leading companies. “As the first stock market index in India, the BSE SENSEX has witnessed every major transformation in India’s growth story — from liberalization to the digital economy. This fund allows investors to participate in that journey through a diversified, long-term vehicle,” he noted.

Investors can subscribe to the NFO through all major mutual fund distribution platforms and online investment apps.

What the fund offers

The Zerodha BSE SENSEX Index Fund will follow a passive management strategy, meaning it won’t actively pick stocks but will instead track the index composition exactly. The goal is to match, not outperform, the returns of the SENSEX, providing exposure to large-cap companies such as Reliance Industries, HDFC Bank, Infosys, ICICI Bank, TCS, and others.

This structure makes it a cost-effective investment option, as passive funds generally carry lower expense ratios compared to actively managed funds. However, investors should note that returns may slightly differ from the index due to tracking errors and expense ratios.

Key advantages and suitability

Diversification: By investing in the 30 Sensex companies, investors gain automatic diversification across multiple sectors.

Low-cost exposure: The passive nature of index funds ensures lower fees, enhancing long-term compounding.

Simplicity: Ideal for investors seeking straightforward exposure to India’s blue-chip stocks.

Risk profile: While volatility mirrors that of the equity market, index funds are considered suitable for long-term investors with a horizon of at least five years.

Understanding BSE SENSEX Index Funds

A BSE SENSEX Index Fund is a passively managed mutual fund that seeks to replicate the performance of the BSE SENSEX Index, which represents 30 of India’s largest and financially sound companies listed on the Bombay Stock Exchange (BSE). These funds invest in the same stocks and in the same proportions as the index to generate returns that closely match its performance, subject to a small tracking error.

How it works

Mimics an index: The fund’s goal is to track the BSE SENSEX and mirror its performance.

Passive management: Unlike actively managed funds, index funds are not stock-picked by managers. The portfolio automatically mirrors the index composition.

Diversification: Investors gain instant exposure to 30 large companies across major sectors, spreading risk effectively.

Key characteristics

Low cost: Index funds generally have lower expense ratios than actively managed funds due to their passive nature.

Risk level: The risk is classified as “very high,” as returns depend directly on stock market movements.

Tracking error: Actual returns may slightly differ from the index due to operational costs.

Investment options: Available in both Direct and Regular Plans, with Direct Plans offering lower expense ratios. Investors can also invest through Systematic Investment Plans (SIPs).

Examples of BSE SENSEX Index Funds

ICICI Prudential BSE SENSEX Index Fund

UTI BSE SENSEX Index Fund

HDFC BSE SENSEX Index Fund

SBI BSE SENSEX Index Fund

Tata BSE SENSEX Index Fund

Zerodha BSE SENSEX Index Fund (NFO opens October 20, 2025)