Nippon India Nifty 50 BeES: Low-Cost Nifty Tracker

Given the spectacular returns from the market over the past couple of years, it would seem that most equity mutual funds have performed well. But that is true only to an extent.

For instance, the best performing large-cap equity fund has delivered 48.01 per cent, while the poorest performer has delivered 31.90 per cent in the last one year, as on September 30,2024. This difference is due to the selection and performance of the underlying stocks in the portfolio.

The rising bull market lifted most stocks and it was not difficult for fund managers to clock positive returns. However, it is difficult for a fund manager to beat the index year after year.

If you want to keep yourself out of this game, Nippon India Nifty 50 BeES could be a decent choice.

The Scheme

It is an exchange-traded fund (ETF) that passively tracks the Nifty. Launched in December 2001, it is India’s first ETF, and among the top five in terms of asset size. It is also a large-cap fund since its benchmark index is the Nifty, which has the 50 most liquid stocks on the National Stock Exchange (NSE). The fund’s value moves in tandem with that of the Nifty. In the past one year, the average difference between its net asset value (NAV) and the market price has been 0.12 per cent

Low Cost Investing

ETFs score over index funds due to their low expense ratio.

At 0.04 per cent, this fund has the cheapest expense ratio among all passively-managed diversified funds. It also has the lowest tracking error (TE) of 0.036 among all diversified passive funds, as on September 30, 2024. The TE of a passive fund is essentially the difference between the returns generated by it and its benchmark index. The lower the TE, the better the fund. A low expense ratio and the ETF’s structure are responsible for a low TE for this fund.

OLM Take

This could be a good starting option for new investors looking to enter the equity market. For existing investors who are content with market-linked returns and are not driven by a desire to outperform the market, this can be a suitable option for their long-term investment goals.

kundan@outlookindia.com