Nifty BeES is one of the most popular investment options open to participation in the equity markets without hassle to pick up stocks. If you're an investor who has ever come across the term Nifty BeES, you know that it's a rather simple and efficient way to invest in the stock market, but just what is Nifty BeEs and how does it work?
Here, we break it all down for you that you want to know about Nifty BeES and give you an overall guideline to invest in it.

What is Nifty BeES?

Nifty BeES is short for Nifty Benchmark Exchange Traded Scheme. It is an exchange-traded fund (ETF) whose performance imitates the Nifty 50 which tracks the movement of 50 of the largest and most liquid stocks listed on the National Stock Exchange in India. So, in short words, Nifty BeES is basically meant to replicate the Nifty 50 index movement.

By investing in Nifty BeES, you indirectly invest in the top 50 companies in India belonging to a number of sectors such as IT, Banking, pharmaceuticals, and consumer goods. Therefore, this is very diversified and balanced investment opportunity.

How Does Nifty BeES Work?

Nifty BeES is presented as an ETF, meaning it incorporates attributes from mutual funds and stocks. Like a mutual fund, it pools money from multiple investors and invests it in a basket of stocks, that is, Nifty 50 index stocks. Unlike traditional mutual fund, Nifty BeES is traded on the stock exchange, just like stocks are traded. Units of Nifty BeES can be bought and sold throughout trading hours at the market prices.

The performance of Nifty BeES reflects the same performance of the index Nifty 50 such that if the Nifty 50 goes up then the value of Nifty BeES goes up and if the Nifty 50 comes down, the value of Nifty BeEs falls too.

Main Features of Nifty BeES

• Diversification

  
  Nifty BeES takes the scheme of automatic diversification a notch higher by investing in the top 50 companies across various sectors in India. The money is therefore invested across 50 companies, thereby naturally bringing the risk involved with the investments in single stocks down several notches. Bad performance in a particular sector would most probably be balanced by some good performance from the other sector.

• Expense Ratio is Low

  
  It has lower expense ratios compared to actively managed mutual funds. Since it is passively tracking the Nifty 50 index, costs in comparison to managing a fund are lower, thus being a low-cost investment vehicle.

• Liquidity

  
  Nifty BeES is very liquid since it is listed on the NSE. You can buy or sell units when trading hours are open, ensuring that you can get in or get out of your investment when you need to.

• Transparency

  
  Since Nifty BeES is an index of the Nifty 50, the investors can clearly see which stocks they are putting their money into. How has Nifty BeES performed? The answer is easy to come across thanks to the public display and easy tracking.

• Ease of Market Exposure

  
  Nifty BeES is a direct access to the Indian equity market for an investor. Instead of picking up the best stocks, you can buy units of Nifty BeES and get exposure to India's top 50 companies.

• Risk Management Through Diversification

  
  It not only spreads the risk from one company into multiple, but also from various sectors into 50 companies. Therefore, it reduces the losses of what would be borne if one or two companies underperformed.

• Cost of Investment

  
  You can invest in Nifty BeES with a small amount of money. You can buy as little as one unit, much smaller than the combined value of all 50 individual stocks in the Nifty 50 index, which is usually far higher.

• Low Maintenance

  
  Nifty BeES is a passively managed investment, unlike stock picking or actively managed mutual funds. No conscious monitoring is required, which is conducive to investors who prefer a hands-off approach.

How to Invest in Nifty BeES?

To invest in Nifty BeES, it's pretty simple and almost similar to buying any stock on the stock exchange. Here's a step-by-step guide:

• Open a Demat and Trading Account

  
  You have to open a demat and trading account with a stockbroker that may allow you to trade on the NSE. The accounts are required for holding the units of Nifty BeES and for trading those units at the exchange level.

• Deposit Funds

  
  Once you have activated the accounts, you would need to fund your trading account. There are usually options to do this via a bank transfer or UPI or any other payment method available through your broker.

• Locate Nifty BeES

  
  Using the stock exchange platform or app provided by the broker, find Nifty BeES. The ticker symbol for NIFTYBEES is often found in the code NIFTYBEES.

• Enter Buy Order

  
  You can then place a buy order of the required number of units of Nifty BeES. Since the price per unit will keep changing throughout the day just like in the case of a stock you can buy at market price or set a limit order at your desired price.

• Track your investment

  
  Once you invest in Nifty BeES, the progress of this particular kind of investment can be followed through the index Nifty 50. Since it is an investment that is passive in nature, a regular active management is not required; however, you are free to sell the units when you want to.

Nifty BeES is easy to invest in the Indian equity market with low costs and efficiency. It offers the merits of diversification and also provides cost-effectiveness and liquidity. It is, therefore, very attractive both to new investors and to old investors. It has low barriers to entry as well as low maintenance requirements, hence very suitable for those interested in creating wealth in the long term with minimal risks.

Nifty BeES may be the perfect investment vehicle if you're looking for an easy way to invest in India's 50 top companies.