Investing in NIFTYBEES (ETF)

Yesterday I made a blog post on my first investment which was in NIFTYBEES. 

NIFTYBEES is a type of ETF (Exchange Traded Fund). ETFs are basically baskets of securities which are traded, like individual stocks, on an exchange. They are a cash market product and trade in the Capital Market segment of NSE. 

An Index fund is a mutual fund that tries to mirror a market index as closely as possible by investing in all the stocks  that comprise that index in proportions equal to the weightage of those stocks in the index.

They are passively managed funds wherein the fund manager invests in the stocks comprising the index in similar weight. Index funds, while reducing the risk associated with the market, offer many benefits to the investors. 

  • ETFs can be bought and sold anytime during the day.
  • They provide investors a fund that closely tracks the performance of an index.
  • They are low cost as they are passively managed.
  • Since an ETF is listed on an Exchange, costs of distribution are much lower and the reach is wider. These savings in cost are passed on to the investors in the form of lower costs.
  • ETFs are highly flexible and can be used as a tool for gaining instant exposure to the equity markets, equitising cash or for arbitraging between the cash and futures market.


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