NIFTY BEES - is the first Exchange Traded Fund or in short can be called as an ETF in India, which seeks to provide investment returns that closely correspond to the total returns of securities as represented by the S&P CNX Nifty Index. Nifty BeES, the first ETF in India, is being introduced by BENCHMARK, an Asset Management Company on January 8, 2002. Nifty BeES won the Golden Peacock Award in the Most Innovative Financial Product in 2002-03
It gives you the most diversified exposure at lowest possible unit size. Approximately value of Nifty bees will be 1/10th value of the prevailing Nifty price.
Why to Invest in Nifty Bees?
- Investing in Exchange Traded Fund (ETF) is much simpler compared to investing in a stock or actively-managed mutual fund. One does not require any expertise to get going in the market.
- So in terms of investor preparedness, ETFs shall come before direct stock investments and active mutual funds. Thus if one is a novice investor one can go for ETFs.
- By investing in a broad market ETF, one is buying market and hence one needs to have a view about only the direction of broad market and nothing else. Thus as alyman one just need to track the general trend to know where his investments are heading.
- While buying a single stock, one has to analyze the stock, management quality, future prospects and current valuation, which is not the case in ETF.
Drawbacks of Nifty Bees
One hands over the control of his investment to a diversified fund and if you really want to test the water in stock market than you have to come to the market and than trade in it and thus Nifty Bees will not be an indeal bet in that scenario.