What is Nifty BeES?
Nifty Benchmark Exchange Traded Scheme or Nifty BeES is an exchange traded fund that was launched in 2002 and is till date considered a great avenue for long-term investing. It aims to shadow the performance of the National Stock Exchange’s (NSE) Nifty 50 index. The benchmark here is the weighted performance of the 50 companies that make up the index.
The average price of goods and services is rising as India’s inflation rate is above 5%. It is crucial to safeguard your money, which is diminishing in value due to inflation. The Compound Annual Growth Rate (CAGR) of Nifty BeES NSE has been above 10% for the last 10 years, which is perfect to beat the inflationary pressures exerted by the economy.
Advantages of investing in Nifty BeES
Nifty BeES is roughly 1/100th of the value of the Nifty index. For instance, if the value of Nifty is 18,000, then the value of Nifty BeES will hover around Rs. 180. This small investment provides an investor with an exposure to 50 large-cap companies and thereby helps in diversification.
Low expense ratio
The expense ratio of Nifty BeES reaches a maximum of 0.8%, which is quite low compared to actively managed mutual funds with a high turnover of assets. This low expense ratio makes it cheaper to invest in Nifty BeES than most actively managed funds.
Like stocks, Nifty BeES shares are traded on a stock exchange (NSE) in real-time when the markets are open. When you buy a unit, it gets directly credited to your demat account, and like stocks, you have access to real-time prices to decide the right time to exit. You can also set the market and limit orders for investing in this scheme.
There is transparency in the investment objective and the investment strategy since Nifty BeES aims to replicate the performance of the Nifty index and consists of only Nifty 50 stocks.
There is high liquidity for the units of Nifty BeES. The volume of trade for Nifty BeES is in several lakhs, thereby providing you with the safety of getting your money back when you need it. Also, since the performance is based on that of the Nifty index, there is no fund manager bias involved.
Nifty BeES is a great investment avenue, with just one downside: Nifty BeES hasn’t given dividends over the last few years but has rather reinvested the dividends back in the scheme. Despite that, it can be a good investment option to consider especially if you don’t have the time to stay up to date with the latest trends in companies and do individual stock picking.