The S&P CNX Nifty Index is replicated by Nifty BeEs, an exchange-traded mutual fund. It was launched in January 2002. Because it trades on the National Stock Exchange, it can only be purchased or sold in a dematerialized form. It provide a variety of benefits to its investors, such as diversification. Nifty BeEs and their advantages are discussed in depth in this article.
In India, what are Nifty BeES?
The abbreviated version of ‘Benchmark Exchange Traded Scheme' is Nifty BeEs. It's an exchange-traded fund that attempts to match the S&P CNX Nifty Index in terms of returns. They trade on the National Stock Exchange in rolling settlement, just like any other stock. It's a hybrid of a mutual fund and a stock because it's an ETF (equity securities).
Nifty BeEs represent a tenth of the value of the S&P CNX Nifty Index. The face value of the note is INR 10. And with a demat account, investors may simply deal in them. The units of this ETF may only be bought and sold in a dematerialized manner. Because it is an ETF, the units are bought and sold at the current NAV or market price. This ETF can also be invested in in a systematic manner.
Nifty BeEs have an expenditure ratio of 0.80 percent, which includes all costs. The expenditures will be 0.65% if the Asset Under Management (AUM) exceeds INR 5 billion. It has the lowest expense ratio among Indian mutual funds. As a result, investing in this ETF is highly cost effective.
Because they trade on the stock market, Nifty BeEs are extremely liquid. Limit orders can also be placed on these ETFs. Because Nifty BeEs track the S&P CNX Nifty Index, the investor is always up to date on the portfolio. In addition, investing in the Nifty BeEs ETF provides diversity because one unit may be used to invest in 50 different firms.
What are the advantages of investing in India's Nifty BeES?
The advantages of investing in Nifty BeES in India include as follows:
Simple and cost-effective
Buying and selling NiftyBeES is as simple as trading equities securities. All costs, including management fees, do not exceed 0.80% of Daily Average Net Assets. The cost ratio is one of the lowest of any mutual fund plan. Furthermore, for assets worth more than INR 500 crore, the fees are as low as 0.65%.
Liquidity and Convenience
The NiftyBeES can be purchased from your mutual fund app like any other mutual fund unit.
Diversification and a Fairly Structured Organization
One unit of the mutual fund provides exposure to fifty S&P CNX Nifty equities. As a result, it provides a decent risk and diversification spread.
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