Kotak MF launches Nifty Next 50 ETF, tapping India's next-gen Bluechips

Kotak Mahindra Asset Management Company has launched the Kotak Nifty Next 50 ETF, an open-ended exchange-traded fund that allows investors to participate in India’s growth story by investing in the potential icons of tomorrow. 

 

The Kotak Nifty Next 50 ETF is a passive fund that tracks the Nifty Next 50 Total Return Index (TRI). 

 

The New Fund Offer (NFO) opened on December 18, 2025, and closes on January 1, 2026.

 

The Nifty Next 50 Index represents 50 companies from Nifty 100 after excluding the Nifty 50 companies. This selection aims to give investors exposure to potentially growing names with the

reliability of large caps. The ETF currently is well-diversified across sectors, reducing concentration risk while providing unbiased exposure.

 

The Kotak Nifty Next 50 ETF is a passively managed fund that aims to track/replicate the Nifty Next 50 Index, providing transparent and cost-effective access to a diversified basket of high-potential companies. 

 

The PE multiple of Nifty Next 50 index is currently trading at a discount i.e. 21.8, which is lower compared to its 10-year average historical of 29.9, making it a reasonable entry point^. (PE stands for Price-Earnings). 

 

Why the Nifty Next 50?

 

The Nifty Next 50 Index represents the 50 companies ranked just below the Nifty 50 in market capitalisation—effectively the pipeline of future index leaders. The Kotak presentation highlights that many of today's largest companies, including HDFC Bank, Reliance Industries, ICICI Bank, Maruti Suzuki, NTPC and Sun Pharma, were once part of the Nifty Next 50 before graduating to the Nifty 50. 

 

Long-Term Outperformance

 

The Nifty Next 50 TRI has historically outperformed the broader large-cap universe across timeframes:

• 20-year CAGR: 14.9% vs Nifty 50’s 13.4%
• 10-year CAGR: 14.6% vs 14.1%
• 5-year CAGR: 18.8% vs 16.5%
• 3-year CAGR: 17.4% vs 13.1% 

 

Rolling return data shows the index delivering 15%+ returns consistently over 3-, 5-, 7- and 10-year rolling periods—indicating long-term compounding strength balanced by lower volatility than mid- and small-caps.

 

A ₹1 lakh investment made in 2003 would have grown to ₹63.5 lakh in the Nifty Next 50 TRI, compared to ₹36.3 lakh in Nifty 100 TRI and ₹32.3 lakh in Nifty 50 TRI.

 

Better Diversification Than Nifty 50

 

The Nifty Next 50 offers lower concentration risk:

 

• Top 3 stocks weight: 40.2% vs Nifty 50’s 57.2%
• Financial sector weight: 20.3% vs Nifty 50’s 36.6%  

 

This gives investors broader exposure across sectors such as capital goods, consumer goods, power, automobiles, healthcare, metals and realty.

 

Valuations at a Discount

 

The Nifty Next 50’s P/E ratio (21.8) is currently below its 10-year average (29.9), suggesting better entry valuations.

 

Index Composition

 

Top constituents by weight include:

 

• Vedanta (3.9%)
• HAL (3.7%)
• TVS Motor (3.6%)
• Divi’s Laboratories (3.6%)
• Cholamandalam Investment (3.2%)

 

 "The Kotak Nifty Next 50 ETF is designed for investors who want to tap into India’s potential set of market leaders. The index has a track record of delivering superior returns in 3,5,10 & 20 years to Nifty 50 TRI, and currently having better diversification makes it a compelling choice for long-term wealth creation," said Nilesh Shah, Managing Director, Kotak Mahindra AMC.

 

"By tracking this index, our ETF offers investors access to a wide range of sectors and companies that may be future members of the Nifty 50 club. Our focus will be on minimizing tracking error and ensuring that investors benefit from the full potential of this index," said Devender Singhal, Fund Manager & Executive Vice President, Kotak Mahindra AMC.

 

The Nifty Next 50 draws its constituents from the Nifty 100, excluding the Nifty 50, and rebalances semi-annually. Non-F&O stocks are capped at 10% cumulatively/

 

Scheme Details

•  
• Category: Index ETF
• Benchmark: Nifty Next 50 TRI
• Minimum Investment: ₹5,000 during NFO
• Fund Managers: Devender Singhal, Satish Dondapati and Abhishek Bisen

 

Who Should Consider This ETF?

 

As per the scheme riskometer, the ETF is suitable for investors seeking:

 

• Passive exposure to large-cap “future leaders”
• Lower concentration risk than Nifty 50
• A rules-based, transparent, low-cost index fund

  Disclosure: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt Ltd