After extensive research on Value Research and other portals, my personal decision is to stick with Nifty BEES as the core of my portfolio.
I do have actively managed funds in my portfolio in the Large Cap, Mid Cap, Small Cap, Sector and diversified categories. However, I intend to buy a fixed number of Nifty BEES units on the same date every month, kind of like a SIP. I intend to do so for at least 3-5 years and then evaluate.
My question here is does anybody here feel the same way about this? Do you have experience and intent in building a core with an ETF like Nifty Bees or Kotak Nifty etc?
If so, please share here.
The problem is ETF are giving you almost same returns like Index. They will be never able to beat the index.
So, if Nifty goes up by 10%, i see BEES or M 50 also goes up by same amount.
In mutual funds like equity diversified like HDFC Equity Fund- Growth or Reliance Regular savings fund- equity growth option, these funds are able to beat the index returns by handsome %. Many other funds are able to beat the index.
Rs 1000 invested every month in HDFC Equity Mutual Fund- Growth option starting from Jan 1, 1995 (the date when fund was launched) would have turned to approx whopping Rs 29,00,000 (29 lakhs) by sept 2010- The calculations are there on HDFC Mutual Fund website.
These returns normally happens when valuations in certain scripts go for a toss...like some scripts which are there with fund managers might be trading at 50 PE or 60 PE and that gets reflected on NAV and higher returns.
Index ETF is good for short bounce back- swing trading.