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Nifty_Bees(N)1.ppt Presentation Transcript

  • 1. Nifty B e ES
  • 2.
    • Only Mutual Fund in India with exclusive focus on quantitative 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-monthly
    • Benchmark
      • 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
  • 3.
    • 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
    • Available across 4000 NSE terminals in 400 cities
    • Tracks the S&P CNX Nifty Index
    • Priced at 1/10 th of the Nifty Index
    • Investment management fees is 0.35% and the total expense ratio is 0.80% per annum, the lowest in India
    • Structured as a Mutual Fund under the SEBI 1996 regulations
    Introduction to Nifty B e ES
  • 4.
    • 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 2002
    • Nearly 60% of trading volumes on American Stock Exchange comprises of ETFs
    History of ETFs
  • 5. S&P CNX Nifty Index
    • India’s premier benchmark index introduced in November 1995 and was developed as a basis for introducing index based derivatives
    • Only companies having a high degree of liquidity defined in terms impact cost are included as constituents of the Index
    • Nifty is calculated using the market capitalisation weighted method
    • Impact cost of the S&P CNX Nifty is 0.10% for a portfolio size of 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. The underlying trades over $ 1.2 bn daily.
  • 6. ETFs Growth - Global Source: Bloomberg, Morgan Stanley Research
  • 7. How Nifty B e ES work Secondary market Seller Buyer NSE Nifty BeES Cash Nifty BeES Cash Primary market Buy / sell Market making / Arbitrage Fund Authorised Participants / Financial Institutions Creation in-kind Redemption in-kind
  • 8. ETF Liquidity Futures Underlying Equity (Creation / Redemption Process) Intra-day Buy/Sell ETF Liquidity The notional liquidity of an ETF is the average volume of the underlying.
  • 9.
    • 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 securities
    • Equitable 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)
    Nifty B e ES Advantages
  • 10.
      • ISIN: INF732E01011
      • Reuters – NBES.NS
      • Bloomberg – NBEES.IN
      • Moneyline Telerate – IN;NBFN
        • 0.80% (upto Rs.1000 mn)
        • 0.70% (next Rs.4000 mn)
      • 0.65% (over Rs.5000 mn)
    Nifty B e ES Details
  • 11. Tracking Error Source: Annualized Six-month Tracking Error (TE) calculated as on July 08, 2004
  • 12. Nifty B e ES vs. Open ended Index funds Does not insulate long term investors from short term investor activity Insulates long term investor from short term trading activity Structure Fund Fund / Stock market Liquidity Daily Indicative Real time NAV Average Best Tracking No Yes Ability to lend units No Yes Hedging Tool No Yes Trade at any brokerage firm No Yes Low Expense Ratio No Yes Traded throughout the day Traditional Open Ended Index Funds Nifty B e ES Attribute
  • 13. “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 “Investing in Nifty BeES is a comparatively better method of participating in any market rally” - The Economic Times, December 2, 2002 Independent Research Review
  • 14. THANK YOU