December 15, 2023

What is Nifty Bees Nifty Bees ETF

What Is Nifty BeES / Nifty BeES ETF?

Nifty BeES, also known as Nifty Exchange Traded Fund (ETF) tracks the Nifty 50 index, which represents the top 50 companies listed on the National Stock Exchange of India (NSE). It is a popular investment instrument that provides investors with a low-cost, convenient, and transparent way to invest in the Indian stock market.

This article will provide a detailed overview of Nifty BeES and its benefits, how it works, how to invest in it, and its performance in recent years. By the end of this article, you will have a comprehensive understanding of Nifty BeES and whether it is a suitable investment option for you.

Nifty BeES Expense Ratio

Particulars Nifty BeES 
Expense RatioCan reach to a maximum of 0.80%

The expense ratio is the annual fee that is charged by the ETF to manage the fund, and it is expressed as a percentage of the fund’s total assets. As of February 2024, the expense ratio for Nifty BeES is around 0.05%, which is significantly lower than the average expense ratio of mutual funds in India, which is around 1.5%. This means that for every Rs. 10,000 invested in Nifty BeES, investors pay only Rs. 5 as the annual management fee, compared to Rs. 150 for an average mutual fund. This low expense ratio helps investors to keep their investment costs low, and it has a significant impact on the overall returns of the investment.

From the table, we can see that the net return for Nifty BeES is 11.95%, whereas for the actively managed mutual fund, it is only 10.5%. This means that the lower expense ratio of Nifty BeES has resulted in a higher net return for the investor, despite both investments earning the same return.

Moreover, Nifty BeES being an ETF, has other benefits too. The lower expense ratio helps in better tracking of the index and also provides liquidity to investors, giving them the option to trade at any point in time during market hours.

Nifty BeES Returns

. As of 01-Aug-2023, the trailing returns of Nifty BeES over different time periods are:

  • 1 year: 17.16%
  • 3 years: 21.61%
  • 5 years: 12.95%
  • Since launch: 15.6%

The table below shows a comparison of the returns of Nifty BeES with the returns of the Nifty 50 index and the Sensex index.

Time PeriodNifty BeESNifty 50Sensex
1 year17.16%16.82%16.98%
3 years21.61%21.22%21.43%
5 years12.95%11.97%12.21%

Nifty BeES Dividend

The ETF has a track record of paying regular dividends to its investors, providing a steady stream of income in addition to potential capital gains.

Here are some key points to keep in mind about Nifty BeES dividends:

  • The dividend amount is not fixed and varies depending on the performance of the underlying index and the ETF’s expenses.
  • The dividend amount is declared by the fund house and is usually expressed as a percentage of the face value of the units held by the investor.
  • The dividend amount is paid out to investors in cash or reinvested back into the ETF, depending on the investor’s choice.
  • Dividends received from Nifty BeES are subject to tax, and the tax treatment depends on the investor’s income tax bracket and the duration of their holding period.

In conclusion, Nifty BeES is an attractive investment option for investors seeking both capital appreciation and regular income. The ETF’s dividend payments are a bonus for investors and can provide a steady stream of income in addition to potential capital gains. However, investors should keep in mind that dividends are not guaranteed and are subject to market conditions and other factors. It is always advisable to consult with a financial advisor before making any investment decisions.

How To Invest In Nifty BeES? 

You can invest in Nifty BeES with the help of a Demat account at the prevailing price. If you are interested in investing in Nifty BeES, here is a step-by-step guide to investing in Nifty BeES with Alice Blue:

  1. Open a Demat and Trading Account with Alice Blue: To invest in Nifty BeES, you need to open a Demat and Trading account with Alice Blue. You can easily open an account by visiting the official website of Alice Blue and filling in the necessary details.
  2. Complete KYC Verification: After opening the account, you need to complete the KYC (Know Your Customer) verification process. This is a one-time process, and you need to submit your identity proof and address proof documents along with a passport size photograph.
  3. Add Funds to Your Trading Account: Once your account is opened and verified, you need to add funds to your trading account. Alice Blue offers multiple payment options, including net banking, debit cards, and UPI.
  4. Search for Nifty BeES: After adding funds to your trading account, you can search for Nifty BeES on the Alice Blue trading platform. You can also directly access the Nifty BeES page by clicking on the ETFs section on the platform.
  5. Place Buy Order: Once you have located the Nifty BeES page, you can place a buy order by selecting the quantity and price at which you want to buy the units. Alice Blue also offers a SIP (Systematic Investment Plan) option, allowing you to invest in Nifty BeES regularly.
  6. Monitor Your Investments: After buying the Nifty BeES units, you can track your investment performance on the Alice Blue trading platform. You can also sell your units anytime you want to redeem your investment.

Nifty BeES vs Nifty 50

The biggest difference between Nifty BeES and Nifty 50 is that Nifty BeES is an ETF that tracks the Nifty 50 index, whereas Nifty 50 is an index of the National Stock Exchange of India (NSE) that comprises the 50 largest and most actively traded stocks in India. 

FeatureNifty BeESNifty 50
DiversificationDiversified with all 50 stocks in the same proportion as the indexComprises 50 stocks
Investment CostLower investment cost than buying individual stocksMore expensive as investors have to buy all 50 stocks individually
LiquidityHigh liquidity, making it easier for investors to buy and sell shares quicklyLess liquid, making it difficult for investors to exit their position during market volatility
PerformanceSimilar long-term returns, with minor differences in performanceSimilar long-term returns, with minor differences in performance

Nifty BeES vs Index Fund

The major difference between Nifty BeES and index funds is that Nifty BeES can charge a lower expense ratio and can provide higher returns than index funds. While both instruments allow investors to diversify their portfolio by investing in a basket of stocks.

AspectNifty BeESIndex Fund
DiversificationProvides instant diversification with Nifty 50 indexMay track broader or narrower index
CostLower expense ratio (around 0.05%)Higher expense ratio (around 0.5%-1%)
Trading FlexibilityCan be traded like a stock on NSETraded through mutual fund companies with limited trading window
TaxationSimilar taxation with long-term capital gains at 10% above Rs. 1 lakhTax treatment depends on underlying index

Ultimately, the choice between Nifty BeES and index funds depends on an investor’s individual preferences and investment goals. It’s important to consider factors such as diversification, cost, trading flexibility, and taxation before making a decision.

To help you understand this in a better way. Here  is the comparative table of historical returns between Nifty BeES and ndex Funds:

Fund Name1-Year Return (%)3-Year Return (%)5-Year Return (%)Expense Ratio (%)
Nifty BeES22.0115.3915.160.05
HDFC Index Fund – Nifty 50 Plan21.7415.3114.850.10
ICICI Prudential Nifty Index Fund22.2115.0614.830.10
Aditya Birla Sun Life Index Fund – Regular Plan22.0314.9714.620.10
UTI Nifty Index Fund22.1314.8214.600.10

Note: Data as of February 2023. Returns are annualized. Expense ratio as per latest available information.

Quick Summary

  • Nifty BeES or Nifty BeES ETF is a type of exchange-traded fund that tracks the performance of the Nifty 50 index.
  • The expense ratio of Nifty BeES is relatively low, making it an affordable investment option for investors.
  • Nifty BeES has historically delivered good returns to investors, with returns closely matching the Nifty 50 index.
  • Nifty BeES also pays dividends to its investors, making it a potentially attractive investment option for those looking for regular income.
  • Investing in Nifty BeES is relatively easy and can be done through a brokerage account.
  • The difference between Nifty BeES and the Nifty 50 is that Nifty BeES is an ETF while the Nifty 50 is an index.
  • Nifty BeES can be a good alternative to index funds, as it provides investors with the ability to trade ETFs throughout the day.

Frequently Asked Questions

  1. What is Nifty BeES?

Nifty BeES (Benchmark Exchange Traded Scheme) is an exchange-traded fund (ETF) that tracks the performance of the Nifty 50 index, which comprises 50 large-cap stocks listed on the NSE.

  1. Is it good to invest in Nifty BeES?

Yes, it is good to invest in Nifty BeES because it provides various benefits such as portfolio diversification, low cost of investment, and transparency. 

  1. Can we sell Nifty BeES?

Yes, we can see Nifty BeES just like any other normal share in the stock exchange during trading hours. 

  1. Is Nifty 50 and Nifty BeES same?

No, Nifty 50 and Nifty BeES are not the same because Nifty 50 is an index that has the largest 50 stocks and the Nifty BeES tracks the performance of this index and invests in stocks proportionately. 

  1. Is Nifty BeES ETF Safe?

Yes, Nifty BeES ETFs are a safe investment as they track the performance of one of the biggest indices of India which is the Nifty 50. 

  1. Is Nifty BeES better than mutual funds?

Yes, Nifty BeES is better than mutual funds because its fluctuation is solely dependent on the Nifty 50 index and not on other securities.

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