Nifty Beas an Index based ETF (What is ETF) , which tracks Nifty index . Nifty Beas can be a important part of your portfolio . One unit equals around 10% value of index , Means if Nifty is around 3000 , one unit of Nifty Beas will be around 300 (can be less or more a bit also , depending on demand and supply)
Some Advantages of Nifty Beas
Simplicity : It is very simple to invest in Nifty Beas , You can buy and sell it easily on stock exchange from your demat account , treat it just like a share .
Economical : It has no load scheme. The annual expense ratio including management fees is a maximum of 0.80% of the Daily Average Net Assets, which is one of the lowest for any mutual fund scheme in India. The costs reduce further to 0.65% .
Liquidity : Any time you want money , you can sell your units in the markets .
No Human Error or Bias : The performance of Nifty BeES is simply the result of performance of shares in the S&P CNX Nifty Index and demand & supply in the market. There is no Fund manager bias. Hence there is no chances of Human error .
If you see the returns , it has consistently outperformed Nifty .
| Annual Returns | ||||||
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| 2008 | 2007 | 2006 | 2005 | 2004 | ||
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| Fund Return | -51.28 | 55.97 | 41.49 | 37.75 | 12.30 | |
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| Rank In Category | 7/22 | 4/22 | 10/22 | 8/20 | 8/18 | |
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| Category Average | -51.78 | 49.97 | 39.13 | 37.22 | 10.16 | |
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| S&P CNX Nifty | -51.79 | 54.77 | 39.83 | 36.34 | 10.68 | |
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| Sensex | -52.45 | 47.15 | 46.70 | 42.33 | 13.08 | |
What are the disadvantages of ETF ?
As such , there are no disadvantages , but obviously there may be many mutual funds which may perform better than NIfty Beas , It may be because of good decision or pure luck .
Who do ETF work ?
See this article from Deepak Shenoy to know about this .
My view
Any one who wants to participate in long term growth and with less risk can divert some part of his cash in Nifty Beas . It scores really high when it comes to convenience and returns over long term . Its easy to purchase . Just invest some small amount every month with discipline over long term .
Other ETF’s
There are many other ETF’s you can go for , they are
- ICICI Prudential SPIcE : Tracking NIFTY
- UTI Nifty Index : Tracking NIFTY
- PSU Bank BeES : Tracking Banking Stocks
ETF’s are the best way to invest in a sector , you can also go for sectoral funds , but these are ETF’s .
{ 8 comments… read them below or add one }
Hello,
Thanks for the good intro to Nifty Bees.
Could you let me know how it handles the dividends from the Nifty stocks? Do the dividends get credited to investors account?
Regards,
Kamal
@kamal
Its works like mutual funds . When dividends are declared , you get the dividend and the value of ETF falls by that amount . But it soon catches up
Manish
I meant what happens to the dividends given by the stocks in the ETF? It is given out as ETF dividend?
Mutual fund dividends should be different than ETF dividends, since the ETF is supposed to track the market, they cannot give more than what the index stocks earned every quarter.
@Kamal
Yes , i said in my first comment that you will get it.
I am not sure if your question is answed .
manish
Manish, Even I was of the view that NiftyBees ETF is good and better than most MF’s, But only untill I read http://businesspandit.wordpress.com/2009/07/16/efficient-market-hypothesis-in-india/ and also couple with the recent option to buy and sell MF online.
Great .. I think Nifty ETF’s is for someone who need lesser risk that Mutual funds ..
Manish
Hi Manish,
Is it advisable to buy the myself niftybees directly from my trading account rather than opting SIP in a index mutual fund?
Trying to understand the expense ration in both, while buying niftybees myself I do not see any additional expense other than trading amount (0.5%) charge from my broker
Thank you,
Balbir
Balbir
Yes , if you have that discipline then direct buying nifty ETF’s would work best .
Manish