Introduction
If you want to invest into the Nifty 50 without having the hassle of buying 50 different stocks one by one, then the Nifty Bees ETF is the answer to your problem. The Nifty Bees ETF is equivalent to buying a ready-made thali instead of ordering many different dishes. With one trade, you get a portion of the most valuable companies of India such as Reliance, Infosys, HDFC Bank and TCS.
In this article, we will simplify the things you need to know about Nifty Bees such as possible returns in the past, expense ratio, risks and whether it’s suitable for beginner investors or not. You will be able to determine if Nifty Bees is worthy of a place in your investment journey.
What is Nifty Bees?
Let’s begin with the fundamentals. Nifty Bees (Nifty Benchmark Exchange Traded Scheme) is India’s very on exchange traded fund (ETF). Launched in 2002 by Nippon India Mutual Fund (previously Benchmark Mutual Fund).
Here’s how it works:
- Nifty Bees is an ETF that aims to track the Nifty 50 Index.
- This means that when you buy Nifty Bees, you are indirectly buying shares of all 50 companies in the Nifty 50.
- It is traded on NSE and BSE like any other stock.
- Price of one Nifty Bees unit is generally around 1/10th of the Nifty index value. So if Nifty were at 20,000, one unit of Nifty Bees would generally cost around ₹2,000.
Think of it in terms of buying a “combo pack” of India’s best companies in just one click.
Why investors like it: Advantages of Nifty Bees
Here are the top reasons why Nifty Bees have gained favor among investors in India-
- Diversification at minimal cost → You gain exposure to 50 leading companies across multiple sectors without having to invest lakhs of rupees.
- Beginner-friendly →It’s no frills and simple, there is no need to try and identify individual winning companies.
- Low expense ratio → Lower than most active-managed mutual funds.
- Liquidity → You can buy/sell Nifty Bees any time during market hours.
- Long-term wealth building → Nifty 50 represents a multi-year growth in the Indian economy, while the Nifty Bees have captured that growth.
Just think about it: instead of betting on just one company like Infosys or HDFC Bank, Nifty Bees gives you access to both, along with another.
The Returns of Nifty Bees Over the Last 5-10 Years
Now, let’s get into the numbers.
The Nifty 50 index has provided long-term annualized returns of 11–13%, on average. Since Nifty Bees was designed to replicate Nifty 50, its performance will be nearly the same (with the exception of a minor expense ratio).
For the sake of comparisons, take a look below:
| Investment | 5-Year CAGR | 10-Year CAGR | Risk Level |
| Nifty Bees (ETF) | ~13% | ~11% | Moderate |
| Large Cap Index Fund | ~13% | ~11% | Moderate |
| Actively Managed Large Cap MF | 10–12% | 10–12% | Moderate to High |
Bottom line: Nifty Bees provides market-like returns, and does not depend on a fund manager’s skills.
Expense Ratio and Fees Compared to Mutual Funds
Expense ratio is basically the costs that you pay to have your money managed into an investment.
- Nifty Bees expense ratio: ~0.05% (very low!)
- Index funds expense ratio: ~0.20%–0.30%
- Active mutual funds expense ratio: 1%–2%
Active mutual funds charge you ₹1,500–2,000 a year for every ₹1 lakh invested, while Nifty Bees amounts to only ₹50.
Over 10–20 years of investment, that’s a whopping difference due to compounding.
How to purchase and sell Nifty Bees on NSE/BSE
Buying Nifty Bees is as simple as buying a stock, this is how you can do it:
- Open a Demat + Trading account (Zerodha, Groww, Upstox, ICICI Direct, etc.).
- Search for “Nifty Bees” on your trading platform.
- Place an order just like you would on any stock.
- Then the units will be credited into your Demat account.
- To sell your Nifty Bees, you would need to place a sell order during market hours.
Some brokers even allow you to set up a SIP (Systematic Investment Plan) in Nifty Bees which makes it a really good way to regularly invest.
Is Nifty Bees Right for You?
So now, should you invest in Nifty Bees? Let’s put this a little more directly:
Good for:
- Long buy-and-hold investors who believe in the growth of India.
- New investors who are looking for an effortless, easy investment
- Passive investors who want index-like returns
- SIP planners wanting to build wealth over time
Not good for:
- Short-term traders looking for a quick profit.
- People looking to beat the market (because it’s basically just the market).
- People looking for high dividends (though you still get dividends in proportion).
If you want consistent, no-fuss exposure to India’s top companies, Nifty Bees certainly is worth considering!
Best Small Cap ETF
While Nifty Bees provides reliable and consistent growth, some investors look for the chance to get higher returns possible from small cap companies. That is the entry point for the best small cap ETFs. These funds track baskets of smaller companies, which can grow 2-3x faster than large caps while also having more risk and volatility.
Looking for more aggressive ETF picks? Check our guide on some of the best small cap ETF options you can get access to right now.
Small Cap Stocks
It is also worthwhile to discuss how Nifty Bees is different from owning individual small cap stocks. Nifty Bees will provide you with a managed investment across a basket of 50 blue-chip companies that on a risk-adjusted basis is the most prudent option, while owning small cap stocks are riskier bets that can multiply that money overnight or, as you would assume, lose a lot of money very quickly.
If you want to do more adventurous investing, and small cap stocks seem to be more your style, check out our beginner’s guide regarding their risks and rewards.
Frequently Asked Questions about Nifty Bees
- Is Nifty Bees better than mutual funds?
If you want low cost, and to invest with direct market returns, yes. However, if you would like to invest with a fund manager’s expertise, you may consider a mutual fund. - Can I do SIP in Nifty Bees?
Yes! Many brokers now allow SIPs in ETFs so you can invest monthly like a mutual fund. - What happens if Nifty goes down?
Nifty Bees tracks the index, so if Nifty goes down, Nifty Bees’ value will go down too. Nifty Bees is good for long-term investors that will endure the ups and downs in the market.
SEBI Disclaimer:
Investments in the securities market are subject to market risks. Read all scheme and investment-related documents carefully before investing.
Disclaimer
The information on this website is intended solely for educational and informational purposes. I am not a SEBI-registered financial counselor, and the information provided here should not be interpreted as investment advice or stock recommendations.
Always conduct your own research or consult with a SEBI-registered advisor before making any financial decisions. Investing in the stock market entails risk, including the potential loss of principal.