To build an all-passive mutual fund portfolio, you should focus on index funds that replicate major stock market indices. Start with largecap index funds like those based on the Nifty50, Sensex, or Nifty100, which offer broad exposure to top-performing large-cap stocks. For additional diversification and a bit of risk, consider including Nifty Next50, which covers stocks that exhibit midcap characteristics.
Add midcap index funds such as the Nifty Midcap50 or Nifty Midcap150 to capture growth from mid-sized companies, and if desired, incorporate Nifty Midcap150-Quality50 for higher-quality midcaps. For small-cap exposure, include funds like Nifty Smallcap50 or Nifty Smallcap250, which focus on smaller, high-growth potential companies.
The Nifty LargeMidcap 250 Index is also an option for a mix of large and midcap stocks. A typical portfolio might be 100% in Nifty50 for simplicity, or a combination such as 60-70% in Nifty50 and 30-40% in Nifty Next50, or 50% in Nifty50, 25-30% in Nifty Next50, and 20-25% in Nifty Midcap150 for a balanced approach.
Avoid sectoral and thematic funds unless you have specific expertise, and consider blending a few well-managed active funds in midcap and smallcap categories if you’re open to mixing strategies. This approach helps in building a low-cost, diversified, and effective passive investment portfolio.