ETF Compare - Nifty BeES and Junior BeES
(Please check related blog dated 15Feb2023 on Nifty Next 50)
Nippon India ETF Nifty BeES and Nippon India ETF Junior BeES are one of the oldest exchange-traded funds in India. They started trading on stock exchanges in 2001 and 2003 respectively.
The underlying indices of Nifty BeES and Junior BeES are Nifty 50 index and Nifty Next 50 index respectively. As they have the longest track record in India, let us explore how they have performed over the years.
Annual Returns
Table 1 and 2 delineate how the two ETFs have performed on an annual basis from 2004 to 2021. They also portray the asset size and expense ratios of the ETFs as at the end of the respective calendar years.
You can see that Nifty BeES' assets under management (AUM) grew from merely Rs 23 crore at the end of 2004 to Rs 5,677 crore by end-2021. With Junior BeES, AUM increased from a meagre Rs 9 crore to Rs 2,294 crore in the same period.
Of late, ETFs have been gaining traction with Indian stocks attracting a wider range of investor community.
Expense ratios of these ETFs are competitive with competition growing among the mutual fund industry with several fund houses launching various kinds of ETFs based not only on the broader indices, but also based on several other narrow (dubbed as smart) indices.
As on 31Dec2021, the expense ratios of Nifty BeES and Junior BeES are 0.05 per cent and 0.17 per cent respectively--they are competitive; but could undergo changes depending on the changes in asset size and other market factors.
Readers can see that in some years one ETF does well and in others another ETF performs better.
On the NSE stock exchange, these two ETFs have decent volumes. Volumes on BSE are considerably lower.
(please click on the images to view better)
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Read more:
BSE 500 vs S&P 500 Indices
Who is Eating my Gold ETF Return?
Foreign Investors Waning Interest in Indian Stocks
Indian Equity ETF Risks and Returns
Modi Rally, Recency Bias and Stock Market Returns
Indian Mutual Funds and The Art of Ripping Off Investors
Do Paint Stocks and Crude Oil Tango?
Weblinks and Investing-------------------
Trailing Returns
Table 3 depicts trailing returns of Nifty BeES ETF and Junior BeES ETF from 1-year to 10-year period. It also provides details of risk measures, namely, Sharpe ratio and tracking error.
Sharpe ratio is a measure that describes the return earned per unit of risk taken to earn the returns. The higher the ratio, the better for the investor. Nifty BeES has got a higher Sharpe ratio.
Tracking error shows how closely the ETF is able to track the performance of the underlying index. A lower tracking error indicates that the ETF is able to match the performance of the underlying index with a smaller deviation.
From an investor's viewpoint, the lower the tracking error, the more desirable the ETF. At 0.11 per cent, Nifty BeES has lower error versus Junior BeES' 0.25 per cent.
If you look at table 3, you could see the difference between the 10-year return of Nifty BeES and its underlying index is just 0.20 percentage points (or 20 basis points). Whereas, the difference is higher at 0.80 percentage points between the Junior BeES and its underlying index. This greater difference results in the latter having a higher tracking error.
The return profile presents a mixed picture. In some years, Nifty BeES does well and in others, Junior BeES does well. For example, on a 10-year trailing basis, Junior BeES has provided superior returns; but Nifty BeES did better on a 5-year trailing basis.
Overall Score
Table 4 provides how the two ETFs stack up on parameters outlined against them.
To sum up, the reader can decide for herself how to choose between these two ETFs based on the analysis provided above. Interested readers may access my other articles presented on this blog to get a better grip on mutual funds and other financial instruments (in the past decade, this blogger has contributed almost 300 articles on financial markets).
Finally, it is better to read the important documents available with the fund house before considering the ETFs for investment.
This is not a recommendation for either of the ETF. This is just an attempt to bring the risks and returns inherent in them so that the reader can decide for herself. Happy investing!
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Additional data: As per blog post dated 24Jan2022 - NSE Indices Comparison>
Nifty Indices trailing returns as on 31Dec2021 >
References:
Nifty 50 Index Evolution Over a Decade
NSE Indices Comparison - compare Nifty 50, Nifty Next 50, Nifty 100 and Nifty 500
Mutual fund asset class returns
India Equity ETF Risks and Returns 31Dec2021
BSE 500 versus S&P 500 Indices 31Dec2021
Nippon India MF factsheet for Jan2022 (data end-31Dec2021)
Value Research compare Junior BeES and Nifty BeES
Disclosure: I've vested interested in Indian stocks and other investments. It's safe to assume I've interest in the financial instruments / products discussed, if any.
Disclaimer: The analysis and opinion provided here are only for information purposes and should not be construed as investment advice. Investors should consult their own financial advisers before making any investments. The author is a CFA Charterholder with a vested interest in financial markets.
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He blogs at:
https://ramakrishnavadlamudi.blogspot.com/
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