Need some assitance of ETF’s. I am looking to make an investment in NiftyBees ETF. I Plan to buy around 5000 Shares as a Lumpsum Investment. Can someone please guide if its a Wise Decision, If not, Why?
If it’s for investment, a reasonably low-cost index fund with a low tracking error will be the better choice imo. The price fluctuations and tracking errors with Nifty Bees are high enough to nullify the benefit of the absence of expense ratio charges.
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What I have read so far is the Charges for NiftyBees Script is just as Selling any other stock so what additional expenses are you referring about?
If your motive only longterm investment then better to choose some mutual fund, it can give you higher returns than nifty returns.
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I just assumed that the reason you were considering investing in Nifty Bees instead of an Index Fund was because of the “expense ratio” of index mutual funds - and I wanted to inform you that it is not enough of a reason.
If that is not the reason and if it is a LT investment, why Nifty Bees? What’s your reason?
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Non related question: Is Nifty Bees and SBI Nifty 50 ETF different?. I checked money control for nippon nifty bees and it shows the same 50 stocks of Nifty 50. So little confused. I do know that this is linked to S&P CNX Nifty Index value. Would like to know if there is any benefit in investing in this.
Part of the related question: Is is ok to buy 5000 in one lumpsum. I do not think so. I have investment in Nifty 50 ETF and I make it a point of buy in small lots if you wish to hold on to your investment for long. The price do fluctuate
Hey Vij! I get your point. Let me be open here. My Objective it to do a Safe LT like 2 to 5 Years, while i still pursue Individual stocks For short to Mid term. E.g. am still holding couple of thousands stocks in GMR, HFCl, Trident, SJVN and NHPC. I did invest in MF’s Earlier (Both Small cap and Blue Chips), for couple of years, and to be honest the returns werent, as I had expected ( Small Cap was Better, but way too Volatile). Again, Purchasing each and every script in Nifty50 is not feasible and will prove way too costly and if i dont have suffcient volume the income is also going to be way too less. Having Said, I want to build a Portfolio in Equity, where I am parking 40 to 50% in Blue Chip holding to ensure the Principal is Unaffected and can be withdrawn with ease when required ( Unlike MF’s). So thats the snapshot of what my intentions are. Feel free to give your suggestions Openly.
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Hey! In my honest Opinion they both are align to the SNP CNX, Just diff AMC handling the same Portfolio ( Nifty 50 Stocks) Differently. Like their percentage of holding in the Nifty50 will be a bit different. Also, the Unit or Nav price will be diff in both. From what I have seen is the Nippon NiftyBees has a better Liquidity and the Price per Unit is also much cheaper. It has it owns Pro and Cons. My Reason for Going with NiftyBees was the Liquidity and the Unit Price falls in my Scheme of things. If you feel otherwise, pls leave your comments. Also, yeah I’ve been adding units of Niftybees since the Crash in 2020 ( I had bought about 2k Units @ 80 Bucks - Not Bad right!!!) And since adding more to it whenever there is a correction.
Hey Stonecold - Yes the Objective is LT, but at the same time i want to have control over my investments. The issue with MF’s is the Portfolio is too vast, and scripts gets Dumped and new added, which you do not have control over. Here, I know the Portfolio and I can track each one of them personally to and nothing in my opinion is as Diversified as Nifty 50. Additionally, I need to have control over the Entry & Exit even though am thinking LT, Just incase there is an issue beyond my Control ( Like another Pandemic of World War 4 - Just Kidding). The Lock-in Period of MF’s Doesnt excite me much, also the NAV’s arent updated real time.
@aaleczz there are index funds that track the index more accurately than nifty bees. Unless you want to utilize the payin got from the sale of etf the same day, index funds are better.
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ETFs are very low cost investments & have several benefits. It’s easily better than any active/passive MFs if you buy/hold/part sell with a strategy…this is active DIY investing. I can only give you a hint…buy in oversold zone & do partial sell (30% or so) in overbought zone later buyback this sold quantity again in oversold…this is my strategy which i’ve been doing with juniorbees, niftybees for past 10 yrs & it works well. You can do a backtest & then invest.
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Nifty Bees makes more sense if you park the cash in it and use short/medium term technical/funda opportunities for trades in stocks or F&O where the quick payin from part-selling ETF can be used.
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That’s the Plan.
Thanks Vij for your inputs. I’ll dig deeper into the Index area and figure out to Invest some portion into it.
with index funds you only get EOD price whereas with niftybees you can apply technicals & buy at various prices to get better average. many of us are doing niftybees which has decent volume…index funds expense ratio has also gone up if you are aware. having said that…i do hdfc sensex fund too…
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don’t need to mix or complicate niftybees with stocks/f&o…stay focused with your backtested strategy…this is not to argue as i’m only sharing my strategy & expressing my views…
Nippon India ETF Nifty BeES. If we use the ETF price and compute the tracking error, it is 5.6% – this 34 times higher deviation from the index arises entirely because the ETF unit holder cannot buy directly from the AMC at NAV and must trade with other unitholders at current market price.
The price fluctuation completely wipes out the expense ratio benefit
See, one can choose index fund or etf, but it’s best to use one or the other for the right reasons
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But in the below pic, Zerodha is showing a tracking error of only 0.03% contrary to the above report of 5.6%. Why so ?
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The tracking error there is calculated using the NAV and not the price data.
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Price meaning Nifty price ?
Though I am following NAV with the price of Niftybees I didn’t see much of a difference from the past 4-5 months. Hardly a difference of 0.25%