Nifty BeEs an Index based ETF, which tracks Nifty index . Nifty BeEs 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 BeEs will be around 300 (can be less or more a bit also , depending on demand and supply)
Some Advantages of Nifty BeEs
Simplicity : It is very simple to invest in Nifty BeEs, 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 Baes 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.
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 BeEs, 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 BeEs. 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.