Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

Exploring NIFTYBEES— Index ETF Fund

2 min read


 

ISIN code INF732E01011
NSE symbol NIFTYBEES
Series EQ
Reuters code NBES.NS
Face value Rs. 10
CMP : Rs 404

 
Niftybees is an index fund which is traded like stocks in the exchange(ETF)..its the simplest way to invest in the stock market. no need to research about companies,no need to study about management and so on..just buying niftybees at every fall wil fetch good returns in the coming years. these are the positive aspects.Doing a SIP(systematic investment) is a good idea. Even benchmarkfunds provide dividend for NIFTYBEES (colletive of the dividends all 50 stocks). They have given Rs 5 per share at record date Sep 15 2008.

Negative aspects:
* low volume (little hard to buy or sell big quantities)

 
The first Indian exchange traded fund — Nifty BeES from Benchmark Mutual Fund tracks the S&P CNX Nifty Index, is structured as an open-end fund but unlike ordinary mutual funds, is listed on the NSE and trades like a stock. So, to buy or sell Nifty BEES, you have to deal with a broker who executes your transactions for a brokerage.Apart from NIFTY BEES, there is also Junior BEES ( Nifty Junior Index) and Bank BEES (Bank index), and yes LIQUID BEES (world's first liquid ETF) and GOLD BEES also.
 

Advantages of Nifty BeES

Nifty BeES is Simple: Nifty BeES can be bought / sold like a share through any NSE terminal at prices available on the screen. The underlying portfolio of Nifty BeES very closely replicates that of the S&P CNX Nifty. Hence, Nifty BeES tracks the movement of S&P CNX Nifty.

Nifty BeES is Economical: Nifty BeES is a 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%, for assets over Rs.500 crore.

Nifty BeES is Convenient: As it is listed and traded on the NSE, Nifty BeES can be bought / sold throughout the trading day just by a call to your broker. This gives you the power to react swiftly to changes in the market. You can even place limit orders. Nifty BeES can be held in your DP account with other portfolio holdings.

Nifty BeES is Liquid: The structure of Nifty BeES attracts liquidity from various sources such as buying / selling by investors, arbitrage with index futures, arbitrage by authorized participants with the underlying shares.

 
Nifty BeES is Neutral: 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.

Nifty BeES is Transparent: As Nifty BeES replicates the S&P CNX Nifty, investors can know at any given point of time where and how much is invested in each stock.

Nifty BeES gives Instant Diversification: Investing in just one unit gives exposure to fifty shares of the S&P CNX Nifty. This allows investors to spread risk with one single decision.

Nifty BeES is an Equitable Structure: The unique “in-kind” mechanism of creating / redeeming Nifty BeES by exchanging a pre-defined portfolio ensures that long-term investors do not bear the cost of short term trading as observed in traditional Open-ended structure. This insulates long-term investors from short-term trading activity

 
Real-time NAV is available on the following website
 
http://www.benchmarkfunds.com/index.cgi
 
NIFTYBEES is very good for diversification.. It reflects the NIFTY 50 stocks index and easy to track.. If you are looking for diversified low risk medium-long term investment then this ETF is a good option..

The drawback is currently the volumne traded on ETF is very low. It is difficult to buy & sell in large quantities..

ETFs are very popular in US and traded in huge volumes. In India it is yet to attract the required attention..

 

View from Mr.PonnuSwamy Padmanaban

NIFTYBEES is good avenue for long-term regular investment.

22% – 30% annualised return from NIFTY

The following analysis shows that 22% – 30% annualised return is possible from NIFTYBEES (i.e. NIFTY) from Rupee Cost Averaging (RCA) and Value Averaging (VA) respectively.

Starting Period: Jan 2002
Till: Jul 2008
Monthly Investment: Rs 10,000

RCA Return – 22% Annualised
VA Return – 30% Annualised

Illustration: http://picasaweb.google.com/ponnuswamy/Misc#5250548403850847170

Value Averaging:
http://money.cnn.com/2003/09/12/pf/expert/ask_expert/index.htm

Courtesy – Annualised Calculation : Vetapalem Sridhar

 
 

 

Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

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4 Replies to “Exploring NIFTYBEES— Index ETF Fund”

  1. Can you please explain annual fee and management fee and how it is calculated.

    Regards,
    Richie

  2. hi guys..if one invests heavily in goldman nifty bees and goldman sachs goes bust, what happens to nifty bees ?

  3. I am interested in investing in Nifty BeAS, Bank Beas, Junior Beas. Please suggest when to invest and when to divest.

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