HDFC BSE India Sector Leaders Index Fund: Invest in Corporate India's leaders

HDFC Mutual Fund has launched a new fund offer (NFO), HDFC BSE India Sector Leaders Index Fund. It is a passive scheme which aims to track the BSE India Sector Leaders Index. The fund will invest in top 3 companies by market capitalization from each sector. For example, in financial services, HDFC Bank, ICICI Bank and SBI are the top 3 stocks by market cap. Similarly in IT, Infosys, TCS and Wipro are the Top 3 stocks (source: NSE, as of 30^th September 2025). The NFO will open for subscription on 7^th November 2025 and close on 21^st November 2025. In this article, we will review HDFC BSE India Sector Leaders Index Fund.

Why invest in sector leaders?

• Sector leaders are usually well positioned to capture a larger share of the growth potential of the industry


• Sector leaders are usually companies that strive for innovation with aim to differentiate and increase market share


• Sector leaders have strong brands and command customer loyalty


• Market share leadership make sector leaders more resilient in recessions and economic downturns


• Sector leaders usually have stronger balance sheets and superior operating margins.

Sector leaders have outperformed the broad market

The chart below shows the returns of BSE India Sector Leaders Index over different periods versus the broad market index, Nifty 500 TRI. You can see that the sector leaders have outperformed the broad market index over long investment horizons.

Source: BSE Index Services, as on 30^th September 2025. *Inception date is 1^st August 2006 since BSE 500 TRI data is available from that date

Sector leaders’ performance have been more consistent than the broad market

BSE Sector Leaders TRI have fallen less (relative to BSE 500 TRI ) in market corrections and have been consistent than the broad market index (outperformed BSE 500 TRI 12 times in 19 fiscal years).

Source: BSE Index Services, as on 30^th September 2025.

More balanced exposure in sector weights compared to broad market index

BSE Sector Leaders Index has higher allocations to telecom, construction & construction materials, realty etc and lower allocations to financial services, healthcare and capital goods compared to the broad market index (see the table below).

Source: BSE Index Services, as on 30^th September 2025.

Superior risk adjusted returns across market conditions

BSE Sector Leaders Index gave higher average rolling returns across different investment tenures and at the same time, had lower volatility compared to the broad market index (see the charts below).

Source: BSE Index Services, as on 30^th September 2025.

Valuations are reasonable despite high quality

Though BSE India Sector Leaders constituents / companies are market leaders with greater financial strength, they do not command high premiums in terms of valuations (see the charts below).

Source: BSE Index Services, as on 30^th September 2025.

Why invest in HDFC BSE India Sector Leaders Index Fund?

• Expense ratios of index funds are lower than expense ratios of actively managed diversified equity funds


• Wealth creation opportunity by investing in leaders with proven track record enduring strengths


• Exposure to leaders across 20+ sectors


• Opportunity to invest in sector leaders at valuations in line with broad market index valuations


• Historical data shows that sector leaders have outperformed the broad market over long investment horizon

Who should invest in HDFC BSE India Sector Leaders Index Fund?

• Investors seeking capital appreciation over long investment tenures


• Investors who want to invest in passive funds


• Investors with very high risk appetites


• Investors with minimum 5 year investment tenures


• Investors looking to invest through monthly SIP for long term wealth creation

Investors should consult their financial advisors or mutual fund distributors if HDFC BSE India Sector Leaders Index Fund is suitable for their investment needs.