Are ETFs Good to Invest In? Best ETFs to Buy in 2025
Which ETFs are good to invest in for 2025. Learn about the best ETFs for Indian investors, benefits of investing in ETFs, and how to build a balanced ETF portfolio for long-term growth and passive income.
Exchange-traded funds, or ETFs, have become a popular choice for Indian investors looking to grow their money in 2025. These funds are like baskets that hold a mix of stocks, bonds, or commodities, and they trade on stock exchanges just like shares.
Many people in India are asking, “Are ETFs good to invest in?” because they offer a simple way to diversify investments without needing to pick individual stocks.
In 2025, ETFs are gaining attention for their low costs, flexibility, and ability to track major market indices like the Nifty 50 or Sensex.
Below we explore why ETFs are a smart choice, which ones are performing well, and how Indian investors can use them to meet their financial goals. It breaks down the benefits, risks, and top options, making it easy for beginners and seasoned investors alike to understand.
Are ETFs Good for Long-Term Investment?
ETFs are often seen as a strong option for long-term investment because they allow people to spread their money across many companies or assets, reducing the risk of losing everything if one stock performs poorly.
For Indian investors, ETFs that track broad indices like the Nifty 50 or Sensex provide exposure to India’s top companies, such as Reliance Industries or HDFC Bank, without needing to buy each stock separately.
In 2025, data shows that ETFs like the Nippon India ETF Nifty 50 BeES have delivered strong returns, with a five-year return of over 100%, making them appealing for those planning for the future, like retirement or buying a home.
Additionally, ETFs are known for their low expense ratios, which means investors pay less in fees compared to other options, allowing more money to grow over time. However, market risks still exist, and the value of ETFs can go up or down based on how the market performs.
Best ETFs to Invest in for Beginners 2025
For those new to investing, ETFs are a great starting point because they are easy to understand and trade. In 2025, beginners in India can look at ETFs like the SBI ETF Nifty 50, which tracks the Nifty 50 index and includes major companies like Infosys and TCS.
Another option is the ICICI Prudential Nifty Next 50 ETF, which focuses on the next 50 companies after the Nifty 50, offering growth potential with a three-year return of around 26%.
Discover more article news may be useful for you.. Go to Homepage
These ETFs are simple to buy through a brokerage account, just like buying a stock, and they don’t require deep market knowledge. Beginners should focus on ETFs with low expense ratios, like the UTI BSE Sensex ETF, which has an expense ratio of just 0.07%, keeping costs low while providing broad market exposure.
Which ETFs Are Safe to Invest in Now?
Safety is a big concern for many Indian investors, especially those who want low-risk ETFs to invest in. In 2025, safer ETFs include those that focus on stable assets like government bonds or large, well-established companies.
The SBI ETF 10Y Gilt, which invests in government bonds, is a popular choice for risk-averse investors, offering a five-year return of about 5.3% with an expense ratio of 0.14%.
Another safe option is the Bharat 22 ETF, which holds a mix of blue-chip stocks from sectors like energy and finance, including companies like NTPC and Power Grid Corporation.
These ETFs are less likely to see big price swings compared to sector-specific funds, making them suitable for those who want steady growth without too much worry about market ups and downs.
High Performing ETFs for Passive Investors
Passive investors, who prefer to invest and let their money grow without constant monitoring, are drawn to high-return ETFs in 2025. ETFs like the Motilal Oswal Midcap 100 ETF, which tracks the Nifty Midcap 100 index, have shown impressive performance with a one-year return of nearly 48% and a three-year return of about 27%.
Another strong performer is the CPSE ETF, which invests in Central Public Sector Enterprises like Bharat Electronics and Coal India, delivering a five-year return of around 35.7%.
These ETFs are designed to mirror the performance of their indices, meaning investors can benefit from market growth without needing to actively manage their portfolios. This makes them ideal for those seeking passive income or long-term growth with minimal effort.
What Are the Benefits of Investing in ETFs?
Investing in ETFs comes with several advantages that make them attractive for Indian investors. First, ETFs provide diversification by holding a variety of assets, which lowers the risk compared to buying a single stock.
For example, an ETF like the Nippon India ETF Nifty 50 BeES gives exposure to 50 top Indian companies in one go. Second, ETFs are cost-effective, with lower management fees than traditional mutual funds—many have expense ratios below 0.5%.
Third, ETFs are flexible because they can be bought and sold throughout the trading day, unlike mutual funds, which only trade at the end of the day.
Finally, ETFs are transparent, as they regularly show their holdings, so investors always know what they own. These benefits make ETFs a smart choice for both beginners and experienced investors in 2025.
ETFs That Pay Monthly Dividends in India
For Indian investors looking for ETFs for passive income, some ETFs offer dividends, though monthly dividends are rare in India.
Most ETFs, like the Nippon India ETF Dividend Opportunities, focus on high-dividend-yield stocks and pay dividends periodically, often quarterly or annually.
This ETF, with a net asset value of about Rs. 80.29 as of January 2025, has delivered a five-year return of 22.6%, making it a solid choice for income seekers.
Another option is the ICICI Prudential Nifty 50 ETF, which may distribute dividends from its underlying stocks, depending on the companies’ payout policies.
Investors should check the ETF’s structure, as dividends depend on the index it tracks, and not all ETFs guarantee regular payouts. Those seeking monthly dividends may need to explore international ETFs available through Indian brokers.
Low Cost Index ETFs to Invest in 2025
Low-cost index ETFs are popular in 2025 because they keep more money in investors’ pockets.
The Nippon India ETF Nifty 50 BeES, with an expense ratio of just 0.04%, is one of the cheapest options, tracking the Nifty 50 index and offering a 15-year return of over 700%. Another low-cost choice is the HDFC Nifty 50 ETF, with an expense ratio of 0.05%, providing broad market exposure at a minimal cost.
These ETFs are ideal for Indian investors who want to invest in the stock market without paying high fees.
By choosing ETFs with low expense ratios and low tracking errors, investors can ensure their returns closely match the performance of the index, making these funds efficient for long-term wealth building.
Are ETFs Better Than Mutual Funds for Retirement?
When planning for retirement, many Indian investors wonder whether ETFs are better than mutual funds. ETFs often have lower costs, with expense ratios as low as 0.03% compared to mutual funds, which can charge 1-2%.
For example, the Vanguard S&P 500 ETF, accessible through some Indian platforms, has an expense ratio of 0.03%, making it a cost-effective choice for long-term growth.
ETFs also offer flexibility, as they can be traded anytime during market hours, unlike mutual funds, which are priced once daily.
However, mutual funds are actively managed, meaning a fund manager tries to beat the market, which can lead to higher returns but also higher risks and fees.
For retirement, ETFs like the UTI BSE Sensex ETF provide steady exposure to top companies, while mutual funds may suit those willing to pay for active management. The investor’s aims and capacity for risk will determine the decision.
How to Build a Balanced ETF Portfolio?
Building a balanced ETF portfolio in 2025 involves mixing different types of ETFs to match financial goals and risk levels.
Indian investors can start with a core holding, like the SBI ETF Nifty 50, for broad market exposure. Adding a sectoral ETF, such as the Nippon India ETF Bank BeES, can provide growth from specific industries like banking.
For stability, a debt ETF like the SBI ETF 10Y Gilt can balance out riskier equity ETFs. Investors should also consider international ETFs, such as the Motilal Oswal NASDAQ 100 ETF, to diversify globally, with a three-year return of about 12%.
A good mix might be 60% equity ETFs, 30% debt ETFs, and 10% international or commodity ETFs like gold. Regularly checking and rebalancing the portfolio ensures it stays aligned with goals, and investors should always research expense ratios and past performance.
Top Performing US ETFs to Invest in Today
Indian investors can access top-performing US ETFs through international trading platforms in 2025, offering exposure to global markets.
The Vanguard S&P 500 ETF (VOO) tracks the S&P 500 index, including companies like Apple and Microsoft, with a low expense ratio of 0.03% and a strong track record.
Another high performer is the Invesco QQQ Trust, which focuses on the NASDAQ 100 and has a one-year return of about 30% as of April 2025.
For those seeking passive income, the Schwab U.S. Dividend Equity ETF (SCHD) offers exposure to high-dividend US stocks with a five-year return of around 10%.
These ETFs are ideal for Indian investors looking to diversify beyond domestic markets, but they should be aware of currency risks and higher trading costs when investing internationally.
Disclaimer: This article is for informational purposes only. I am not a SEBI-registered financial advisor. All the information provided here is based on publicly available data, news sources, and my independent research. Please consult with a certified financial advisor before making any investment decisions. The share market involves risks, and past performance is not indicative of future results.
