Nifty Bees Vs. Liquid Bees

This article talks about Nifty bees, Liquid bees and how they differ from each other.

· 3 min read
Nifty Bees Vs. Liquid Bees

Nifty Bees and Liquid Bees are examples of Exchange Traded Fund (ETF). An ETF is a kind of security that traces an index, sector, commodity, or other kinds of assets, which can be purchased or sold on a stock exchange the same way shares are traded in the market. Nifty Bees stands for Nifty Benchmark Exchange Traded Scheme, which aims to offer returns close to the S&P CNX Nifty Index, whereas Liquid Bees is an ETF that invests entirely in the overnight money market. Let us understand about Nifty Bees and Liquid Bees in detail:

Nifty Bees

Nifty Bees was launched on December 28, 2001, and became the first ETF in India. Nifty Bees are also known as Nippon India ETF Nifty Bees is an exact copy of the Nifty Index with the same stocks and same weightage. Nifty Bees are exclusively traded on the National Stock Exchange (NSE), India. It is an open-ended Large Cap Equity scheme. In simple words, Nifty Bees is a group of fifty stocks that makes up the Nifty 50 Index of India and when we purchase one unit of Nifty Bees, we are investing in all the fifty stocks simultaneously. Nifty Bees works in the same way as Derivative i.e., it does not have its own value but is dependent on the value of the Nifty 50 Index. As it is an ETF, it is a combination of mutual funds and an equity share. Each unit of Nifty Bees is 10% of the value of the S&P CNX Nifty Index, with a face value of each unit is Rs. 10. Transactions of Nifty Bees are possible only in dematerialized form. The expense ratio of Nifty Bees is around 0.65-0.80%, which is one of the lowest ratios among mutual funds in India. Nifty Bees is also free from fund manager bias as its returns are based on Nifty. Nifty Bees has high liquidity as it can be traded on NSE. Anyone can invest in Nifty Bees through their trading or Demat account. We can invest in Nifty Bees either through lumpsum or Systematic Investment Plan (SIP). Dividends are paid on Nifty Bees depending on whether surplus funds are available or not.

Liquid Bees

Liquid Bees was launched on July 08, 2003. It is an open-ended Exchange Traded Fund that invests exclusively in a portfolio of Collateralized Lending & Borrowing Obligation (CBLO), Repo & Reverse Repo with day-to-day dividend payments, and compulsory reinvestment of dividends. Liquid Bees is characterized with a high degree of safety and a high degree of liquidity as it is for a very short term and is monitored by the RBI. Liquid Bees is benchmarked against NIFTY 1D Rate Index. We can use Liquid Bees for trading margins. The average duration of Liquid Bees is 0.01 years and the duration is nil year.

large-cap

S. No.NIFTY BEESLIQUID BEES
1.ETF Nifty Bees is an open-ended large cap equity scheme.ETF Liquid Bees is an open-ended Liquid Debt scheme.
2.Nifty Bees was launched on December 28, 2001, and was the first ETF to be traded in India.Liquid Bees was launched on July 08, 2003, almost after 1.5 years of the launch of Nifty Bees.
3.Nifty Bees aims to provide returns similar to the returns of all fifty stocks represented by the Nifty 50 Index.Liquid Bees aims to provide current income with low risk and high liquidity.
4.Nifty Bees is benchmarked against the NIFTY 50 total return index.Liquid Bees are benchmarked against the NIFTY 1D Rate Index.
5.The asset allocation of Nifty Bees comprises around 99.67% in equities (Nifty 50 stocks) and around 0.33% in cash and cash equivalents.Liquid Bees comprises of debt securities with varying levels of maturities.

6.

 

The recommended investment horizon for investing in Nifty Bees is more than 3 years.The recommended time horizon for liquid bees is less than 3 months.
7.As per the SEBI’s guidelines Nifty Bees comes under the very high-risk category.As per the SEBI’s guidelines, Liquid bees come under the low-risk category.

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