Nifty Bees(N)1

8/9/2019 Nifty Bees(N)1

http://slidepdf.com/reader/full/nifty-beesn1 1/14

Nifty BeES



Only Mutual Fund in India with exclusive focus onquantitative and passive investment management

Monitored by Securities and Exchange Board of India

(SEBI)

Managed proactively by the Trustees, separate from the

Asset management firm

Trustees meet compulsorily once in 2 months and report to

SEBI every quarter

The Compliance Officer reports independently and directly

to the Trustees bi-monthlyBenchmark

Benchmark is also regulated by the National Stock Exchange of India

rules and bye laws

The securities and other assets of the Fund are held by ABN AMRO

About Benchmark



First Exchange Traded Fund (ETF) in India

Combination of a share and a mutual fund unit

Real-time Trading on NSE

Real-time Indicative NAV on www.benchmarkfunds.com

Available across 4000 NSE terminals in 400 cities

Tracks the S&P CNX Nifty Index

Priced at 1/10th of the Nifty Index

Investment management fees is 0.35% and the total expenseratio is 0.80% per annum, the lowest in India

Structured as a Mutual Fund under the SEBI 1996regulations

Introduction to Nifty BeES



First ETF came in 1993 on S&P500 called SPDRs

SPDRs and QQQs (ETF on Nasdaq 100) are the most actively

traded ETFs

Globally, there are currently 348 ETFs managed by 43

managers across 31 exchanges.On February 28 , 2005 the ETF market globally was $313.60

billion ( Source: MSDW )

ETFs launched across the world include Japan in September

2001 and in Korea and Singapore in 2002Nearly 60% of trading volumes on American Stock Exchange

comprises of ETFs

History of ETFs



S&P CNX Nifty Index

India¶s premier benchmark index introduced in November1995 and was developed as a basis for introducing index basedderivatives

Only companies having a high degree of liquidity defined interms impact cost are included as constituents of the Index

Nifty is calculated using the market capitalisation weightedmethod

Impact cost of the S&P CNX Nifty is 0.10% for a portfolio sizeof Rs.5 million

Represents about 66% of total market capitalisation

Correlation with Morgan Stanley Capital International(MSCI) India Index is about 97% over last 3 years

Attracts most of the Futures of over $ 1 bn daily. Theunderlying trades over $ 1.2 bn daily.



ETFs Growth - Global

Source: Bloomberg, Morgan Stanley Research

Growth of International ETF

-

100,000

200,000

300,000

050100

150200

250

300350

Assets No. Of ETF

Assets 811 1,121 2,302 5,268 8,234 17,596 39,605 74,337 104,80 141,62 212,01 247,96

No. Of ETF 3 3 4 21 21 31 33 92 202 280 282 318

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004



How Nifty BeES work

Secondary market

Seller

Buyer

NSE

Nifty BeESCash

Nifty BeESCash

Primary market

Buy / sell

Market making /

Arbitrage

Fund

Authorised

Participants /

Financial

Institutions

Creation

in-kind

Redemption

in-kind



ETF Liquidity

FuturesFutures

Underlying EquityUnderlying Equity

(Creation / Redemption(Creation / Redemption

Process)Process)

IntraIntra--dayday

Buy/SellBuy/Sell

ETFETFLiquidityLiquidity

The notional liquidity of an E TF is t he average

volume of t he underlying.



Nifty BeES Advantages

Simple ± Can be bought/ sold on NSE like a share«real-time

Economical ± No load scheme. Annual expense one of the lowest

for any mutual fund scheme in India.

Diversification ± It¶s a cost efficient way to invest in a basket of

securitiesEquitable Structure ± Long term investors insulated from short

term trading activity

Transparent ± Investors have access to information on the

portfolio constituents represented represented on a daily basis

Premium/Discount to NAV ± Between +&-0.5%(Source: Business Standard)



NSE SYMBOL : NIFTYBEES

ISIN: INF732E01011

Reuters ± NBES.NS

Bloomberg ± NBEES.INMoneyline Telerate ± IN;NBFN

TOTAL EXPENSE RATIO:

0.80% (upto Rs.1000 mn)

0.70% (next Rs.4000 mn)

0.65% (over Rs.5000 mn)

ENTRY/ EXIT LOAD: NIL

Nifty BeES Details



Tracking Error

Source: www.mutualfundsindia.com

Annualized Six-month Tracking Error (TE) calculated as on July 08, 2004

0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%

LIC MF Index Fund - Nifty Plan - Grow th

HDFC Index Fund - Nifty Plan

PRINCIPAL Index Fund - Grow th

Prudential ICICI Index Fund

Franklin India Index Fund - NSE Nifty Plan - Dividend

Tata Index Fund - Nifty Plan - Option A

Birla Index Fund - Grow th

Tata Index Fund - Nifty Plan - Option B

UTI Nifty Fund

SBI Magnum Index Fund - Grow th

Junior BeES

Nifty BeES



Nifty BeES vs. Open ended Index funds

Attribute Nifty BeES Traditional Open

Ended Index Funds

Traded throughout the day Yes No

Low Expense Ratio Yes No

Trade at any brokerage firm Yes No

Hedging Tool Yes No

Ability to lend units Yes No

Tracking Best Average

NAV Indicative Real time Daily

Liquidity Fund / Stock market Fund

Structure Insulates long term

investor from short term

trading activity

Does not insulate

long term investors

from short term

investor activity



³ Nifty BeES seems the best index fund when it comes to all three

parameters; Entry loads, Expense ratios and Tracking Error.It is

India¶s first and only Exchange Traded Fund or simply put, a next

generation index fund.´

- Business World, September 30, 2002

³Investing in Nifty BeES is a comparatively better method of

participating in any market rally´- The Economic T imes, December 2, 2002

Independent Research Review



THANK YOU

Documents

Nifty Bees(N)1