Nifty BeES

If you’re a new investor, you must have heard of Nifty BeES and index mutual funds. In this blog, we will clarify both investment options in the simplest terms. The major difference between index mutual funds and Nifty BeES is that index mutual funds are not traded on the stock exchange; asset management companies handle them. On the other hand, Nifty BeES are entirely traded on the stock exchange.

But you might be having lots of other doubts regarding both investment options. Don’t worry, here we’ll elaborate on Nifty bees and index mutual funds by mentioning the definitions, characteristics, and key differences. So let’s have a quick look right below.

What Are Nifty BeEs?

 Nifty BeEs are ETFs which copy the performance of the Nifty 50 index. When investors want to invest in the 50 biggest companies under the NSE (National Stock Exchange), then within a single transaction you can definitely do that through Nifty BeEs. As it’s an ETF, you can buy or sell them anytime you want during the market hours.

 Once the concept of Nifty BeEs is clear to you, let’s understand the characteristics first. It will help you to make more informed investment decisions. 

Characteristics Of Nifty BeEs

1. Nifty BeEs are listed on the stock exchanges and can be bought and sold during market hours.

2. To invest here, you need to open a DEMAT account first because Nifty BeEs are traded just like stocks. 

3. If you compare the Nifty Benchmark Exchange Traded Scheme with index mutual funds, then you will not receive any growth options. 

4. Nifty BeEs are highly liquid and can be easily traded on the stock exchange

5. For the Nifty Benchmark Exchange Traded Scheme, the expense ratio is lower, but the trading cost is higher.

What Is An Index Mutual Fund?

 Index mutual funds are like mutual funds that copy the performance of market indices. As we already mentioned earlier, the Nifty Benchmark Exchange Traded Scheme can be traded in the stock market index funds are always handled by different asset management companies. Here the investors buy or sell the units through particular investment platforms. Just like other mutual funds investors can pay a lump sum or start SIP as well.

To get clarity about index mutual funds, let’s discuss the characteristics first.

Characteristics Of Index Mutual Fund

1. Index mutual funds not only provide dividends but also provide growth, so investors can start investing depending on their risk tolerance level.

2. These funds are managed by fund managers and are capable of offering investors stable returns. In that case, investors should invest for the long term.

3. With this investment instrument, investors can redeem their investments whenever they want.

4. Index mutual funds are one of the best options for passive investment, and holding them for a long time can be extremely beneficial for wealth creation.

5. Compared to the Nifty Benchmark Exchange Traded Scheme, the expense ratio is higher with the index mutual fund due to the administrative costs.

What Makes Nifty BeEs and Index Mutual Funds Different From Each Other? 

Based on various factors, there are a few things about Nifty BeEs and Index Mutual Funds you must know. Here are the key factors,

Particulars	Nifty BeEs	Index Mutual Fund
Demat Account	Trading in Nifty BeEs investors must have a Demat account	To start investing in an index mutual fund, no Demat account is required.
Fund Manager	For ETFs or Nifty BeEs, investors can experience a flexible trading option.	Generally, fund managers manage the index mutual fund.
Expense Ratio	The expense ratio is lower here.	For this fund, the expense ratio is comparatively higher.
Valuation	It is done constantly for Nifty BeEs.	The valuation of the fund is done by the end of the day, i.e., the NAV.

Also, check – Herd Mentality in Mutual Fund Management

Wrapping Up

By now, we hope all your doubts have been cleared. But if you ask where you should invest, whether in Nifty BeEs or an Index Mutual Fund, well, the answer will always depend on your personality of investment personality or purpose of investment. If you’re comfortable with intraday trading, for example, selling your investment when the index gets corrected during the trading hours, then the Nifty Benchmark Exchange Traded Scheme is the ideal option for you. On the other hand, if SIP seems more comfortable, then an Index Mutual fund will be better for you. So it all depends on your needs.

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Disclaimer – This article is for educational purposes only and does not intend to substitute expert guidance. Mutual fund investments are subject to market risks. Please read the scheme-related document carefully before investing.