ETFs don’t have minimum investment requirements like mutual funds do, at least not in the same way. ETFs, on the other hand, trade on a per-share basis, so unless your broker allows you to buy fractional shares of stock, you’ll need at least one share to get started.
Simple and Economical
Buying and selling NiftyBeES is as simple as trading stock securities. Any NSE terminal can be used to purchase and sell at current market prices. Nifty BeES’ underlying portfolio closely resembles the S&P CNX Nifty. The NiftyBeES program is a no-load program. To put it another way, all expenses, including management fees, do not exceed 0.80% of Daily Average Net Assets. The fee ratio is one of the lowest of any mutual fund scheme. Furthermore, for assets worth more than INR 500 crore, the expenses are as low as 0.65%.
Convenience and Liquidity
The NiftyBeES is a stock that is traded on the stock exchange (NSE). As a result, it can be purchased at any time during the day’s trading hours. Investors might act rapidly to seize an opportunity and even place limit orders. Nifty BeES assets can be held in a DP account alongside other portfolio holdings. The very nature of the Nifty BeES promotes liquidity. Buying and selling by investors, arbitrage by authorized participants with the actual shares, and arbitrage using index futures are only a few examples. As a result of the large trade volume, the investor has plenty of liquidity.
Neutral and Transparent
This ETF is free of fund management bias. In other words, the performance of these funds is determined by the S&P CNX Nifty Index as well as market demand and supply. And not on the study and analysis of the fund management. Because the Nifty BeES is a replication of the S&P CNX Nifty, unit holders may always see where and how much money is put in a particular stock.
Diversification and Equitable Structure
One unit of the mutual fund provides exposure to fifty S&P CNX Nifty equities. As a result, it provides a strong risk and diversification spread. Nifty BeES features a unique “in-kind” purchasing and selling process that involves swapping a pre-defined portfolio. Unlike other open ended mutual funds, investors in this long-term fund are not charged for short-term trading. To put it another way, it protects long-term investors from short-term trading.
How do I choose the right ETF to invest in?
If you want to diversify your portfolio with ETFs, for example, you can look at your portfolio and see which sectors you don’t have exposure to, then buy an ETF that tracks important firms from that sector. If your portfolio is mostly comprised of debt investments and you want to increase your exposure to equity, an ETF that tracks a prominent index such as the Nifty 50 or the BSE SENSEX is a good option. To choose the proper ETF for you, you must first understand why you want to invest in ETFs. Here are a few questions to consider:
Are ETFs suitable for novice investors?
Because of their many advantages, such as low expense ratios, ample liquidity, a wide range of investment options, diversification, and a low investment threshold, exchange traded funds (ETFs) are perfect for new investors. ETFs are also ideal vehicles for a variety of trading and investment strategies employed by beginner traders and investors because of these characteristics. The seven finest ETF trading methods for novices, in no particular order, are listed below.
What should my ETF investment be?
ETFs have a low entrance barrier because there is no minimum investment amount. You only need enough to cover the cost of one share plus any commissions or fees.
Add Funds to your account
The following step is to fund your account. Please keep in mind that SEBI laws require you to separate your equity and commodity funds. The funds available in Equity can only be utilized to trade Stocks, Equity Futures & Options, and Currency. You can skip this step if you already have enough funds in your Equity balance to trade.
ICICIdirect offers a 3-in-1 trading account, which includes a bank account, a demat account, and a trading account. This allows you to move money from your ICICI bank account to your ICICIdirect trading account in real time.
- Select ‘Allocate Funds/Limit’ from the menu on the left side of your screen with your mouse. You will be directed to the following page:
- Click the ‘Submit’ button after entering the amount you want to add to your account.
Note: From this page, you can adjust or deallocate funds according to your trading needs.
Add Option contracts to My Favourites
Before purchasing a Call/Put Option contract, you must first look for it and add it to your ‘My Favourites’ tab. Select the ‘My Favourites’ option from the menu on the left side of your screen.
Then choose the exchange where you’d like to purchase a Call/Put Option contract. Now, on the same page, click the ‘Add To My Favorites’ link. You will be directed to the following page:
To begin, go to this page’s Options tab (marked in red) and type in the first few characters of the Contract name. You will begin to receive contract names based on the characters you type. Continue inputting the chosen Option contract’s name until it shows. Choose the contract you want. Select the exchange now. Then choose between Call or Put as an option type. Select a contract by clicking the ‘Select Contract’ button. Option contracts will show in a list-
The list includes all contracts for your chosen Option with various expiry dates and strike prices. Tick the box next to the Option contract you want to trade and then click ‘Add to My Favorites.’ On the next button, select ‘Ok.’
Place a Buy order for the Option
You’re ready to place a buy Call/Put option order now that you’ve added selected option contracts to your ‘My Favorites’ tab. In the ‘Action’ column corresponding to the contract you want to buy/sell, click ‘Buy.’ You’ll be sent to the next page-
Details about the chosen Options contract, such as the Exchange, Option Type, Stock Code, and so on, will be auto-populated on the place order page. You can also see your account’s limit. Click ‘Get Quote’ to learn more about the contract’s pricing, or ‘Best 5 Bids/Offers’ to learn more about the contract’s cost.
- Select ‘Order Validity’ from the drop-down menu. You have two options here: Day or IOC. A day order can be executed at any point during the day, whereas an IOC (instant or cancel) order is either executed or canceled immediately.
- Select the ‘Order Type’ option next. You have two options here: Market or Limit. Limit orders are used to put orders at a specific price, whereas Market orders are used to place orders at the best available price.
- If you select Limit Order, type your price in the ‘Limit Price’ box and then click ‘Submit.’
A margin calculator is located next to the ‘Limit Price’ field. This comes in handy when selling an Options contract, and we’ll get to it later.
You’ll be led to a page where you can confirm your order. Before confirming an order, it is a good idea to double-check all of the details. If you want to change your order, click ‘Back,’ otherwise click ‘Proceed.’
Your order has been sent to the exchange. The majority of newcomers to options trading make the error of believing that placing an order successfully means it will be executed. However, this does not always occur. Often, there are no sellers accessible for the price you quoted, thus the order is not fulfilled.
Check for the execution of the order
To check the progress of your order, go to the menu on the left of the screen and select the ‘OrderBook/TradeBook’ tab. You’ll be redirected to the order book’s page.
You can check the status of your order by going to the Options option in the top menu.
You can also check the status of your order by going to the top and clicking on the ‘Trade Book’ option.
Are dividends paid on ETFs?
Dividends on exchange-traded funds (ETFs). Qualified and non-qualified dividends are the two types of dividends paid to ETF participants. If you own shares of an exchange-traded fund (ETF), you may get dividends as a payout. Depending on the ETF, these may be paid monthly or at a different interval.
Are exchange-traded funds (ETFs) safer than stocks?
The gap between a stock and an ETF is comparable to that between a can of soup and an entire supermarket. When you buy a stock, you’re putting your money into a particular firm, such as Apple. When a firm does well, the stock price rises, and the value of your investment rises as well. When is it going to go down? Yipes! When you purchase an ETF (Exchange-Traded Fund), you are purchasing a collection of different stocks (or bonds, etc.). But, more importantly, an ETF is similar to investing in the entire market rather than picking specific “winners” and “losers.”
ETFs, which are the cornerstone of the successful passive investment method, have a few advantages. One advantage is that they can be bought and sold like stocks. Another advantage is that they are less risky than purchasing individual equities. It’s possible that one company’s fortunes can deteriorate, but it’s less likely that the worth of a group of companies will be as variable. It’s much safer to invest in a portfolio of several different types of ETFs, as you’ll still be investing in other areas of the market if one part of the market falls. ETFs also have lower fees than mutual funds and other actively traded products.