NIFTY BEES – is the first ETF (Exchange Traded Fund) in India, which seeks to provide investment returns that closely correspond to the total returns of securities as represented by the S&P CNX Nifty Index. It gives you the most diversified exposure at lowest possible unit size. Approximately value of Nifty bees will be 1/10th value of the prevailing Nifty price.
ETFs are one of the latest financial innovations and any new concept takes time to be known widely. Globally it took more then five to seven years before it could be of any significant size. In India, it was introduced with Rs 21 crore in size , a fraction of the mutual fund industry, it has come far with more than Rs 700 crore in size with six ETFs.
The Nifty BeES also scores over other index funds due to its low tracking error and expense ratio, apart from easier tradeability as it is listed in the NSE. One can also consider doing an SIP in Nifty BeES.
Some of the reasons to invest in Nifty Bees :
- Investing in Exchange Traded Fund (ETF) is much simpler compared to investing in a stock or actively-managed mutual fund.
- So in terms of investor preparedness, ETFs shall come before direct stock investments and active mutual funds.
- By investing in a broad market ETF, one is buying market and hence one needs to have a view about only the direction of broad market and nothing else.
- While buying a single stock, one has to analyze the stock, management quality, future prospects and current valuation, which is not the case in ETF.