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How to Invest in NSE 20 Index Funds in 2025
Putting your money into an index is a simple and convenient way to create an investment portfolio, especially if you’re just getting started with investing.
An index, like the NSE 20, provides a snapshot of a particular section of the stock market, and by investing in it, you gain exposure to a diverse portfolio of stocks, which can help reduce risk compared to investing in individual companies.
One of the best ways to invest in the NSE 20 index is through Exchange-Traded Funds (ETFs). ETFs are designed to track the performance of an index and are highly convenient for beginners. They allow you to buy shares in the NSE 20 with just a few clicks.
Read on to learn how to invest in the NSE 20 effectively and explore the best methods to do so. Compare different investment strategies, available ETFs and index funds, and find out why NSE 20 index investing is a low-cost, relatively low-risk approach to growing your wealth over time.
How do I invest in the NSE20 index?
Copy link to sectionThe easiest way is to sign up to a stock broker, open an investment account, and buy shares in an NSE 20 ETF. This guide explains how to do it:
Step 1. Sign up to IG Markets
Copy link to sectionWe recommend using IG Markets to invest in NSE 20. Create your trading account and deposit some money using a payment method of your choice.
This is a fairly quick process that takes just 15-30 minutes, but you need to supply a form of photo ID to verify the account before you can use it.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
IG Markets
Step 2. Decide how to buy NSE 20
Copy link to sectionThis boils down to choosing between an NSE 20 ETF or buying the stocks in the index manually. ETFs are generally better suited to investors who want to passively track the NSE 20’s performance. Individual stocks offer a greater range of trading options and flexibility.
Step 3. Invest in the NSE 20
Copy link to sectionSign into your trading account and search for the NSE 20. Hit the ‘buy’ button and enter the details of your purchase, such as how much you want to spend. Hit ‘buy’ again to execute the trade.
Step 4. Monitor your investment
Copy link to sectionWhen you buy a stock, the trade goes through more or less instantly, and you’ll be able to see your new open position in your trading account. ETF purchases can take longer, and if you buy outside of traditional trading hours it won’t go through until the next morning.
Your trading account will show the price change in the NSE 20 since you bought it, so you can see your profit/loss at a glance. Use that information, along with your own research, to decide when to sell the NSE 20 and close your position, ideally at a profit!
How much does it cost to invest in the NSE 20 index?
Copy link to sectionFrom $0 to $5, depending on how you invest. For each option, you must consider the cost of buying the actual asset, whether that’s an ETF, index fund, CFD*, or share, plus the fees associated with it.
*Note that CFDs are not available to US investors.
ETFs and CFDs are generally the cheapest option overall, as they have low fees and a low minimum investment. Index funds and mutual funds have low fees but may have a high minimum investment. Buying individual stocks is the most expensive option in absolute terms, because the share price of a single large company is often more than $100.
All options are likely to include a trading fee, which you pay each time you make a transaction. Some trading platforms offer zero-fee trading, with others it may be a few dollars.
Then ETFs and index funds each have their own expense ratio. Expense ratios refer to an annual management fee, charged as a percentage of your total investment. Expense ratios are usually no more than 0.05%, so if you invest $1,000, you would pay $5 per year in management fees.
The different ways to invest in the NSE20
Copy link to sectionAs we mentioned above, there are numerous ways to put your money into the NSE 20. ETFs and individual stocks are the simplest options for beginners, but there are alternatives. Here’s a brief overview of each option and who it’s best suited for.
NSE 20 ETFs
Copy link to sectionAn ETF (exchange-traded fund) is an investment fund traded on a stock exchange, much like a stock. Exchange traded funds can hold different assets, such as individual stocks, bonds, or commodities, or serve as a proxy for a stock market index.
An NSE 20 ETF is one way of investing in the NSE 20. It’s simply an investment fund that mirrors the performance of the NSE 20. When you buy shares in the fund, the value of your investment will rise or fall with the NSE 20 itself.
ETFs are ideal for new investors because they have a very low minimum investment. You can start with a few pounds and get exposure to some of the world’s largest companies. They’re also practical if you plan on trading the NSE 20 index, because you can buy or sell shares in the fund throughout the day.
NSE 20 index funds
Copy link to sectionAn index or mutual fund is an investment fund that aims to track the performance of a stock market index, such as the NSE 20. It’s very similar to an ETF, in that there are low management fees and you can buy shares through your online broker.
However, there are a couple of differences. NSE 20 index funds are only priced at the end of each trading day, so you can buy or sell shares in the fund once per day. There may also be a higher barrier to entry, through a much larger minimum investment when you invest in NSE 20 index funds.
That means an NSE 20 mutual fund is better suited for long term investors with a higher initial budget, where the infrequent trading and barriers to entry are far less of an issue.
NSE 20 CFDs (non-US users only)
Copy link to sectionCFDs (contracts for difference) are a way to speculate on NSE 20 price changes with more flexibility than if you use an ETF or index fund. A CFD is a ‘derivative’, which means it gets its value from the underlying asset – in this case the NSE 20 – but it’s separate from it.
As a result, CFDs can be leveraged, where you borrow money to multiply the size of the trade, or they can be used to go ‘short’, where you place a trade on the index to fall in value. You can also buy and sell them outside of regular trading hours.
All of this means NSE 20 CFDs offer the potential to outperform a fund that passively tracks the NSE 20’s performance. Of course, you can also underperform it as well. Tools like leverage and shorting introduce a lot more risk, and are best left to experienced traders.
NSE 20 futures
Copy link to sectionFutures contracts are agreements to buy or sell the NSE20 at an agreed price on a set date in the future. NSE 20 futures are a means to predict how you think the index is going to perform over a set time frame, such as the next three or six months.
Most futures contracts involve leverage, so you only put up a small part of the total trade value (the margin) when you buy one. That makes futures more risky, and they require a bit more financial expertise to understand as well.
Some traders use futures as a hedge against the performance of stocks they own. For instance, if you own stocks that are part of the NSE 20 then you might want to short the NSE 20 so that you still make some money if the price falls.
NSE 20 stocks
Copy link to sectionAnother way to invest in the NSE 20 is to buy shares in the individual stocks that the index tracks. It isn’t practical to buy every share in the index, but you can invest directly into a few of the most heavily weighted stocks in the NSE 20 in order to get broad exposure to its performance.
The most heavily weighted stocks in the NSE 20 tend to be the largest companies by market capitalisation. If you invest directly in those largest stocks, you gain exposure to the index without taking on the risk of all the underlying companies.
One reason to do this is that these larger companies with the highest market cap dominate the index anyway, so that it can give you the impression of a diversified portfolio while actually being reliant on the performance of those particular stocks.
The flip side of investing directly like this is that you lose the diversification and stability that comes with buying into an entire index. It requires much more hands-on management to do your own stock picking, so it’s best suited to more experienced investors.
Where can I invest in the NSE 20 index?
Copy link to sectionAccording to our expert research, IG Markets is the best ETF broker to invest in NSE 20 index funds.
Both NSE 20 ETFs and NSE 20 CFDs are available to invest in through IG Markets .
Here are three more places to buy the NSE 20, ranked according to their cost, security, and features.
IG Markets
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
AvaTrade
Should I invest in the NSE 20 index?
Copy link to sectionYes, NSE 20 investing is a great choice if you’re looking for a safer investment with more price stability compared to picking individual stocks. It’s also ideal if you don’t have the time to actively manage a portfolio of stocks, because you can simply invest in a bunch at the same time and then leave it alone.
The flip side is that you have less control over which companies you invest in. An index committee decides how the index works, and you can’t pick and choose the underlying companies you like the most. The NSE 20 is better suited to hands-off investors, compared to those who have the skills, experience, and desire to pick their own stocks.
What are the advantages of investing in the NSE 20 index?
Copy link to sectionAn index provides instant stock market diversification, where you spread your risk across a large number of underlying companies, rather than one or two. Here are some more reasons why you might want to invest in the NSE 20 index:
- Access to a diversified portfolio of stocks. The NSE 20 includes large and stable companies across different industries. The diversification protects you, as the performance of the others can make up for one or two stocks falling in value.
- Less expensive than buying shares one by one. You can normally invest in a Nairobi Stock Exchange ETF for a few pounds, which gets you a piece of all the companies on the index. Compare this to paying a few pounds per share for each individual stock, and it can add up to a big saving.
- Get exposure to lots of different industries. The NSE 20 includes banks, mining companies, media organisations, and many other types of business. This helps with the diversification, as each industry may react differently to the economic environment and the variety ensures a relatively stable overall performance.
- A simple way to invest in the Kenyan stock market. All the stocks on the NSE 20 operate in Kenya. There are strict requirements about how much of the business must be based in Kenya, so it’s a way to invest in the economy as a whole rather than banking on the performance of certain companies.
- Less time commitment compared to picking your own stocks. It’s much easier to pick an index and invest in it, rather than spending a long time researching which stocks to buy. That makes indices ideal for beginners, who may not yet have the expertise to pick stocks for themselves.
What are the disadvantages of investing in the NSE 20 index?
Copy link to sectionThe main risk of investing in the NSE 20 is that all the underlying companies are related in some way, so a broader economic downturn that affected the entire country would likely affect many stocks in the index at the same time. Here are some more risks of NSE 20 investing.
- The NSE 20 is a small index, which can lead to higher volatility. There are only 20 stocks on the index, which is a lot less than on major indices like the FTSE 100. Fewer stocks often means more volatility, because each company has a greater influence on the overall index performance.
- The index’s performance is closely linked to the Kenyan economy. Any issue that affects the Kenyan economy as a whole is likely to affect all the stocks on the index at the same time, removing some of the benefits of diversification.
- It’s difficult to find ETFs or funds that invest in the NSE 20. As the NSE 20 is a small index based in an emerging market, you may not be able to invest in it very easily from the US or Europe.
