Exchange-traded fund (ETF) in India, Nifty BeES (Benchmark Exchange Traded Scheme), aims to offer investment returns that closely resemble the total returns of assets as reflected by the S&P CNX Nifty Index. On the capital market section of the NSE (National Stock Exchange), shares and mutual fund units are combined to form Nifty BeES. The S&P CNX NIFTY index is worth 1/10th of each Nifty BeES unit.
Diversification, index tracking and minimal cost are the advantages offered by NIFTY BeES. Nifty BeES can be purchased and sold like shares at prices on the screen using any NSE terminal. The Nifty BeES basic portfolio is very close to the S&P CNX Nifty. Therefore, BeES Nifty BeES follows the S&P CNX Nifty's movement.
The Nifty BeES is not a load scheme. The annual expense ratio, which includes management charges, is one of the smallest for any mutual fund scheme in India at 0.80% of daily average net assets. For assets of more than 5 billion rupees, the cost is further reduced to 0.65%.
Nifty BeES has the following characteristics:
The first exchange-traded fund in India, Nifty BeES, was introduced on December 28, 2001. The Nippon India Mutual Fund is currently responsible for managing Nifty BeES.
Nifty BeES units equal 1/100th of the value of the Nifty 50 Index and 1/10th of the S&P CNX Nifty index, respectively.
NAV data are calculated in real-time as traded on the Nse. Buying and selling of Nifty BeES units are traded in a dematerialised form. Consequently, investors can purchase and sell units on the stock exchange anytime. In addition, there is also an option to make trades at the same time.
The minimum investment is INR 50,000.
Nifty BeES is an Exchange Traded Fund tracking the Nifty 50 Index. It invests in the securities represented by the Nifty 50 index, trying to generate an investment return before costs that would be very close to the actual returns of those securities as measured by the Nifty 50 index. To achieve this, it follows a passive investment approach, investing in the constituent stocks of the Nifty 50 index in the same proportion, except for a very small percentage set aside for liquidity.
For a brokerage charge, Nifty BeES can be purchased and sold through a trading and demat account, just like stocks. It is listed on the National Stock Exchange and the Bombay Stock Exchange. Unlike mutual funds that can only be traded at the end of a day, it gives itself symbols and codes for trading and an opportunity to conduct transactions anytime throughout its trading day through market prices set by demand and supply.
You can buy as little as one unit of Nifty BeES at a time and even place a limit order to buy at or below the specified price or sell at or above the specified price. These securities may be stored in demat form as ordinary stock when acquired. Here, you can find the most recent market information about Nifty BeES. Nifty BeES liquidity advantage enables its investors to buy and sell it readily throughout the day.
Large investors and authorised participants can participate in creation units, the least expensive units that can be bought or redeemed directly from the AMC. It is 50,000 units) sized straight from the AMC for Nifty BeES.
The benefits of the Nifty BeES are mentioned below.
1. Ease of trading During market hours, investors can trade the fund in real-time. Investors can trade by submitting to their broker the details of a transaction they wish to execute via telephone or by making orders available on their trading account. To minimise losses, investors can also benefit from placing limit orders.
2. Higher liquidity This fund gives investors high liquidity because it can trade like any individual stock. Investors can obtain liquidity through many sources, such as arbitrage through index futures and authorised participants with the underlying shares.
3. Simplicity of fund The fund is easy for investors to invest in and trade through a Demat account and a trading account, like any typical ETF fund. The Fund tracks its underlying index to match its performance with the fewest possible tracking errors.
4. Transparency Over other investment types, Nifty BeES can provide a significant level of transparency. At any time, investors can obtain information on the exact position or precise investments in each of the Fund's securities.
5. Low costs ETFs generally have lower cost ratios than other investment products, such as mutual funds. This fund has no exit load, as has been the case for several Mutual Funds.
The Nifty BeES is an exchange-traded fund offering diversification for investors. Mutual funds invest in fifty companies, so when investors buy a single ETF unit, they are automatically diversified, thus spreading risk. This investment portfolio is known to the investors as it replicates S&P CNX Nifty, making it a very easily accessible form of investing. It is easily bought and sold, since it's traded on the National Stock Exchange. It is thus to protect long-term investors from the effects of trade activity and additional costs for short-term investors. Thus, NSE Nifty BeES can be regarded as a good investment. Moreover, check out the Kotak Securities app for any kind of investment.
Compared with other funds, Nifty BeES has one particular weakness: it may deliver a relatively lower return. This is because Nifty BeES has been designed to mirror the movements of a specific index and may limit its growth potential in comparison with actively managed funds.
Nifty BeEs, like any other type of equity investment, are subject to market volatility. Investors should be able to anticipate short-term volatility in the price of their investments and have a much longer investment horizon, which may make them more advantaged by rising Indian equity markets.
Nifty BeES does not have any lock-in periods or maturity dates. As a result, one can leave the scheme at any time during trading hours.
Without an indexation benefit, holding identical investments for over one year will still be taxable at 10%.
0 people liked this article.