This post is a must read for all Investors who wish to diversify their portfolio in one single trade. In this post we have the following for you.
1. What is BeES?
2. What is Nifty BeES?
6. Who can Invest?
7. Performance of Nifty BeES
What are BeES?
- BeES stands for Benchmark Exchange Traded Scheme
- It is an Exchange Traded Fund (ETFs) owned by Goldman Sachs Mutual Fund.
- ETFs are mutual fund schemes that combine the best features of open ended and close-ended funds.
- They are like stocks – listed on NSE/BSE, liquid, tradable throughout the day, priced continuously and in demat form.
- BeES represent a unique tool for investing in a mutual fund at the price and time of your choice.
What is Nifty BeES?
- NIFTY BeES – was the first ETF (Exchange Traded Fund) in India
- Returns closely correspond to the returns of the CNX Nifty Index
- Provide diversified exposure at lowest possible unit size
- Approximately value of Nifty BeES will be 1/10th value of the prevailing Nifty price
- It structures as a Mutual Fund under the SEBI 1996 regulations
- It can be purchased or sold like a share and can be held in your DP account
Also Read : Change in Lot Size for Nifty, Bank Nifty and NSE Securities
Click Here To Start Trading With Trade Smart Online
Advantages of Nifty BeES
Simplicity: Trading in Nifty BeES is similar to Trading in Equity. Any investor having trading and demat account can buy and sell Nifty BeES at the price displayed on the screen. Nifty BeES tracks the movement of S&P CNX Nifty. It is because the underlying portfolio of Nifty BeES very closely replicates that of the S&P CNX Nifty.
Economical: There is a no load scheme on Nifty BeES. 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.
Convenient: It is listed on NSE and BSE, and can be bought or sold through a broker. This helps you in taking and squaring off position easily over the market movements. One can even place limit orders. It is possible to hold the unit of Nifty BeES in your DP account, with your other portfolio holdings.
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.
Neutral: The performance of Nifty BeES is simply the result of performance of shares in the CNX Nifty Index and demand & supply in the market. There is no Fund manager bias.
Transparent: As Nifty BeES replicates the CNX Nifty, investors can know at any given point of time where and how much is invested in each stock.
Instant Diversification: Investing in just one unit gives exposure to fifty shares of the CNX Nifty. This allows investors to spread risk with one single decision.
No leverage: One should have adequate funds in his/her account to keep the delivery of the units of Nifty BeES.
No Short Position: One cannot carry forward his/her short position like Nifty Futures. Hence should have the delivery before selling it in the market.
Transaction Cost : The transaction cost involved in trading in Nifty BeES are far in excess as compared to trading in Nifty Futures, This can be verified from our Brokerage calculator.
Also Read : Cover Orders Explained
Who can Invest?
1. Individuals 2. Association of Persons
3. HUFs 4. NRI
5. PartnerShip Firm 6. Company
7. Trust 8. Societies
9. FIIs 10. OCBs
Nifty BeES performance since 2012
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You are right on this. Thanks for pointing this out! 🙂
Correction – instead of benchmark replace with portfolio.
If the benchmark is the Nifty, then it is an index fund, right?
In which case Quantum Index fund (also ETF) has the lowest expense ratio (only 0.05%) amongst ALL funds.