What are Index Funds?
Index Funds are mutual fund schemes, they follow a passive investment strategy of replicating the performance of an index and build a portfolio with the same stocks in the same proportions as the given underlying index.What are ETFs?
ETFs are special kind of index funds, which represent a basket of securities, that mirror the composition of an Index, and are listed and traded on exchanges like stocks. They can be bought and sold in real-time at a price which changes throughout the day. Buying Index/ETF is a comparatively safer, cheaper and less riskier way of investing. In December 2001, India began its foray into the sphere of exchange traded funds. Nifty BeES, the first Indian ETF, was launched by Benchmark Mutual Fund based on S&P CNX Nifty Index.ETFs vs. Index funds
Introduction to Nifty BeES
Nifty BeES is the first Exchange Traded Fund (ETF) in India. It is an combination of a share and a mutual fund unit. It allows you to?trade Real-time on NSE and gives you Real-time Indicative NAV. With Nifty BeES you can tracks the S&P CNX Nifty Index. Nifty BeES is Priced at 1/10th of the Nifty Index and the Investment management fee is 0.35% and the total expense ratio is 0.80% per annum, probably the lowest in India. It Structures as a Mutual Fund under the SEBI 1996 regulations.
What is S&P CNX Nifty Index
S&P CNX Nifty Index is India?s premier benchmark index introduced in November 1995. It was developed as a basis for introducing Index Based Derivatives. S&P CNX Nifty is calculated using the Free Float methodology. Only companies having a high degree of liquidity defined in terms of low Impact Cost are included as Constituents of the Index. Impact Cost of the S&P CNX Nifty is 0.06% for a portfolio size of Rs. 50 Lakhs and it represents about 53.61% of the Total Market Capitalization of NSE as on 31st Dec 2010.
What are benefits of Nifty BeES?
Simple - Can be bought/ sold on NSE like a share real-time.
Economical - No load scheme. Annual expense is one of the lowest for any mutual fund scheme in India.
Diversification - Its a cost efficient way to invest in a basket of securities.
Equitable Structure - Long term investors insulated from short term trading activity.
Transparent - Investors have access to information on the portfolio constituents represented on a daily basis.
How Nifty BeES work?
Nifty BeES vs. Nifty Futures
Comparison of growth of investments made thru Lump sum & SIP in Nifty BeES & Nifty Index
How to invest in Nifty BeES online through HDFC Securities
Step 1 - Log on to your Trading account
Step 2 - Click on Buy/Sell
Step 3 - Select product as CnC and equity
Step 4 - Enter Script code NIFBEN & No.of units.
Step 5 - Place your order