VR Logo

Nifty BeES: India's first ETF Launched

Investors can now gain exposure to a diversified portfolio with one single decision as Nifty BeES can be bought or sold like any other stock on the exchange through brokers. The Fund is expected to list on the NSE on 8th January

The IPO of the first exchange traded fund is currently open till 18th December. The Fund is expected to list on the NSE on 8th January. The Nifty Benchmark Exchange-Traded Scheme (Nifty BeES) is an Exchange Traded Fund from Benchmark Mutual Fund. It is listed on the capital market (rolling settlement) segment of the National Stock Exchange and track the S&P CNX Nifty Index. Nifty BeES can be bought or sold like any other stock on the exchange through brokers. As Nifty BeES track the S&P CNX Nifty Index it allows investors to obtain exposure to a diversified portfolio with one single decision.

ETFs are innovative products that provide exposure to an index or a basket of securities that trade on the exchange like a single stock. ETFs have a number of advantages over traditional open-ended index funds as they can be bought and sold on the exchange during trading hours at prices that are close to the NAV of the Scheme. Unlike listed close ended funds, which trade at substantial premiums or more frequently at discounts to NAV, ETFs are structured in a manner which allows "in-kind" creation and redemption of units directly with the fund by authorised participants i.e. exchanging a pre-defined basket of shares for units thereby allowing them to take advantage of any mispricings.

Exchange Traded Funds (ETFs), a permanent feature on the investment landscape in US is a recent phenomenon in Asia and Europe. Even in bear market conditions, ETFs have recorded a growth of over 60% in the last year in the US. ETFs came into existence in the USA in 1993. The first ETFs were based on the S&P 500 and are popularly known as SPDRs (Spiders). ETFs have gained prominence over the last few years with over $70 billion (as on December 2000) invested in ETFs in over 30 indices globally. About 60% of trading volumes on the American Stock Exchange is from ETFs.