THE CASE FOR NIFTY BEES
Indian equity markets have been favored by many foreign investors over a long period of time and it is not without a reason. Over years, our markets have given stellar returns to investors. It can be understood from the CAGR returns it has generated, for example, In the 10 year period, the benchmark index of NSE, Nifty 50 has given a CAGR of 15%, the same is 12% for a period of 15 years and 11% on 25 year basis. Some stocks have given even better returns than this.
But, A matter of Concern is the lack of involvement from Indian population in this exciting journey. Consider many grown countries, the participation of population in financial markets is considerable. One in two citizens of the United States has exposure to markets, whereas an abysmal 2.5% invest in stock markets. Thanks to the new generation of millennials, the participation of retail traders are increasing considerably.
In this blog post, We are going to discuss about NIFTY BEeS, ( Bench mark exchange traded schemes). One reason why Indians keep away from Stock markets is because of complexity. No one is willing to skim through 50 stocks in Nifty, leave alone 1600 odd companies in NSE. But what if it was possible to get the returns these indices offers, without these “complex analysis”. Nifty BeES give us all the possibilities.
Nifty BeES are a kind of funds, which works just like stock investing. You can buy units of Nifty in the from of BeES. The funds invest in all the stocks of Nifty 50 in the proportion in to the weightage of the Index. Usually, Nifty BEeS are priced around 1/100th of Nifty’s Value. So, you can invest in NiftyBeEs with very small investments. Lets say, you have Rs. 10000 as savings and you want to “Invest” it, Nifty BeES can be a good choice.
As investments are based on Nifty Index, an investor has ready access to the constituents and proportion of investments. The role of a “Fund Manager” is very limited and are inexpensive when compared to other funds. Fund managers will constantly be trying to beat the market returns and charging a premium. Further, this also eliminates the possibilities of analyst bias. Nifty BeEs can give you similar returns with very less investments. These products are very Liquid and can therefore be used for very short term investments.
These BeEs are also available in Various Indices like, Nifty Bank and on metals like Gold.
Advantages of Nifty BeEs:
- Diversified in nature as exposure to stocks is different.
- More transparent.
- Lesser FEE.
- More Liquid.