The Nifty Benchmark Exchange-Traded Scheme (Nifty BeES) is the first-ever exchange-traded fund (ETF) scheme, which mirrors the performance of the Nifty 50 (N50) index.
The Nifty BeES is traded on the National Stock Exchange (NSE). Investing in a unit of the Nifty BeES provides exposure to the whole N50 index, which comprises 50 different equities from 13 different sectors. Significantly, investment in the Nifty BeES tracks the performance of the N50 index.
The top 50 large-cap companies that are listed on Nifty 50 would never change. For instance, in case a particular company’s performance is poor, it is moved to the 51st position. Similarly, the company that was on the 51st position will be shifted to the 50th position and an investor’s money will be appropriately invested in it.
Generally, an ETF tends to provide the advantages of both shares and mutual funds. It can be easily traded on the stock exchange for which benchmark performance is an indicator of underlying assets or index. Comparatively, an ETF is better than mutual funds considering it has higher liquidity and lower cost as compared to mutual funds. Moreover, an ETF can be easily traded just like a stock on an exchange.
Market volatility tends to have an influence on Nifty BeES, which is similar to any other equity-based investment. An investor should consider long-term investment horizon before parking their money in Nifty BeES.
Considering that Nifty BeES mimics the performance of the N50 index, there could be a small variance between the returns of ETF and the index, which is referred to as a tracking error.
Also, it is important to note that Nifty BeES can be influenced by intraday price fluctuations. Overall, Nifty BeES has emerged as a popular investment tool for investors who want to gain exposure to the stock market, specifically the large-cap segment represented by the N50 index.
Rajiv is an independent editorial consultant for the last decade. Prior to this, he worked as a full-time journalist associated with various prominent print media houses. In his spare time, he loves to paint on canvas.