What is Nifty BeES? Who Are Its Major Constituents?

What is Nifty BeES?

As Nifty indicates an index of the national stock exchange (NSE) that tracks the weighted average share price of the top 50 companies listed on it. Likewise, nifty bees mean the mixture of a stock or share and a unit of a mutual fund that is traded on NSE’s capital market segment. 

Meaning of Nifty BeES?

Firstly, what are bees in the stock market? Bees' full form is Benchmark Exchange Traded Scheme which tracks the performance of an index associated with it. 

Nifty BeES' full form is the Nifty Benchmark Exchange Traded Scheme which is the first ever exchange-traded fund (ETF) traded in India which provides returns closely related to the securities on the S&P CNX Nifty Index. 

An ETF provides the advantages of both shares and mutual funds and can be easily traded on the stock exchange for which performance is an indicator of underlying assets or index. An ETF is better than mutual funds in that it has higher liquidity and lower cost as compared to mutual funds. They can be easily traded just like a stock on an exchange.

Features of Nifty BeES – 

The salient features of Niftybees are - 

1. It is the first ETF introduced in India on 28 December 2001.
2. Currently, it is handled by Nippon India Mutual Fund and managed by fund manager Mr. Mehul Dama.
3. Each unit of Niftybees is 1/10th part of the S&P CNX Nifty Index value and 1/100th part of the Nifty 50 Index.
4. Likewise, Nifty is calculated on a real-time basis, Niftybees provides real-time NAV and can be traded anytime on NSE. 
5. They can be sold or bought anytime on the NSE platform in a dematerialized form just like the shares traded on it.
6. They can be traded on an intraday basis also. 
7. The minimum investment size is ₹ 50,000.
8. The assets under management (AUM) in this fund is ₹ 10,211 crore.

How does Nifty BeES work?

Niftybees tracks the performance of the Nifty 50 index and provides returns based on its performance. This fund will follow the passive approach by investing in the same proportion as the portfolio of the Nifty 50 index. It can directly be invested through trading and a Demat account by paying a brokerage fee associated with it. It can be sold and bought anytime during the trading time just like a stock.

Nifty BeES Advantages and Disadvantages

The advantages of investing in Niftybees are – 

1. Risk Diversification– Niftybees provides diversification in the sense that it tracks the 50 shares of S&P CNX Nifty. So, an investor can just purchase one unit of Niftybees and can take advantage of the bigger portfolio.
2. Cost Reduction– This fund has the lowest cost as compared to any other scheme of just about 0.65% for assets worth more than ₹ 500 crores.
3. Liquidity– They can easily be bought and sold just like any share and encash on T+2 days.
4. Dematerialized form– They can easily be traded using a trading and Demat account when the market is open.
5. No Bias– They are free from any bias of fund managers as they clearly indicate or move in direction of the Nifty 50 Index.
6. Transparent and Economical– Nifty bees mean a unit of a particular index. So, there is transparency in the performance, and one also can just be purchased one unit of that. There is no entry and exit load on this fund. 
7. Security for long-term investors– As the portfolio is pre-decided, long-term investors can secure themselves and are not required to incur the cost of short-term trading. 

Disadvantages of investing in Niftybees are – 

1. Lower Returns– Niftybees provides fewer returns as compared to mutual funds as it traces the movement of a particular index.
2. Extra diversification– Sometimes extra diversification will lead to a loss in an investment which can also create confusion in the minds of the investors. 

Nifty BeES Yearly Returns

Returns of Niftybees are - 

(Data as of 17th November 2022) (Returns not annualized)

Disclaimer: The securities quoted are exemplary and not recommendatory. Past performance is not indicative of future returns

Top 10 Stocks in Nifty BeES

Clearly, the constituents of the Nifty 50 Index will also be the constituents of Niftybees. Financial Services account for the top with a share of 36.99% followed by the IT sector with a share of 14.09% in the Nifty Index. 

(Portfolio data updated as of 31st October 2022)

Disclaimer: The securities quoted are exemplary and not recommendatory. Past performance is not indicative of future returns

Conclusion

Investment in Niftybees will help investors in moving with the market. It will help the investors in reducing their risk by investing in a large portfolio of Nifty and take the advantage of it just by purchasing a unit of it. So, anybody who is looking for an investment that provides a consistent return in line with the market can invest in Niftybees.

This is not an investment advisory. The blog is for information purposes only. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, goal, time frame, risk and reward balance, and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs. The performance and returns of any investment portfolio can neither be predicted nor guaranteed.