Ask ETFs and Indexing queries here

[manalisharma12]

What are advantages of Index ETFs over Index Mutual Funds?

Advantages of ETFs over other open ended mutual funds are:
1) Listed and traded on the Exchange with real time NAV which enables you to know at what price you are buying the units unlike index mf units where you know your NAV at after the market hours.

2) Very cost efficient as annual expense ratio is 0.5% compared to 1.0-1.5% of other mutual fund.

3) ETFs have low tracking error compared to open ended schemes.

4) No portfolio churning expense i.e when a large institution investor come or goes out, you and your fund is incurring the transaction cost.

Hope that helps!!

 

[vasa1]

...
1) Listed and traded on the Exchange with real time NAV which enables you to know at what price you are buying the units unlike index mf units where you know your NAV at after the market hours.
....

I wonder about this phrase. Just like for any listed share, there is a bid and an ask. If you watch an ETF in real time, you may see the underlying asset change value far more frequently than the last traded price of the ETF. This is quite often the case even in the most highly traded ETF, NiftyBEES.

 

[bunny]

Is the ETF unit price affected by supply and demand just like the cash market? Or are there any other factors too?

 

[vasa1]

Is the ETF unit price affected by supply and demand just like the cash market? Or are there any other factors too?

Well, the basic value of the underlying is the most important, but the price is, at each moment, dependent on the supply / demand.

Just to give you a really hilarious example: look at the BSE Sensex versus the Kotak Sensex ETF. This is sooo poorly traded that the disparity is shocking!

 

[vasa1]

Well, the basic value of the underlying is the most important, but the price is, at each moment, dependent on the supply / demand.

Just to give you a really hilarious example: look at the BSE Sensex versus the Kotak Sensex ETF. This is sooo poorly traded that the disparity is shocking!

You can see this link!!!!

 

[manalisharma12]

Re: About LiquidBeEs

Am hoping that you can provide some inputs of LiquidBees...

1. How are they useful?
The Using Liquid BeEs effectively article is not correct today as online money transfer mitigates any cheque writing hassle to the broker. Further, the brokerage/taxes of a LiquidBeEs buy/sell eats away any short term gains from them.

2. Amount/frequency of dividend?
What is the typical dividend expectation in comparison to a short term Fixed Deposit? Is there any periodic bonus or something like that? How frequently is dividend credited?

3. What does one do with fractional units?
The literature says that they can be sold to Benchmark; is that a convenient procedure?

As a backdrop, had bought 60 LiquidBeEs some time back and the DP shows 60.126 units. The dividend increased twice I think, once a week. Not very sure as I forgot to track it which was the sole purpose of buying them in the first place.

To answer your query here it goes!

Point 1: Thats true for the people who have online trading account but how what about the investors who dont have a online trading a/c and transact through broker / agent? Also Liquid BeES has tied up with more than 60 recognized DPs who have waived off the brokerage charges and have made this product virtually free of cost

Point 2: there cannot be a comparison between Liquid BeES and fixed deposit as your money is locked in for certain tenure which is not the case with Liquid BeES, also the dividends are declared on daily basis but its debited to your account once a month you can get the daily dividend details and tentative upload of future dividend from www.benchmarkfunds.com under Liquid BeES section

Point3: it is very convenient to redeem your fractional units by getting in touch with Benchmark and they provide you with a account where you can transfer the fractional units and cheque is issued within weeks time.

Hope this helps! Let me know for more such queries

 

[vasa1]

Re: About LiquidBeEs

...Also Liquid BeES has tied up with more than 60 recognized DPs who have waived off the brokerage charges and have made this product virtually free of cost
...

Any idea about the demat charges? If a stock or ETF is sold by us from our demat account, the DP charges (as distinct from the brokerage charges) come to Rs. 10-20 depending on the broker. Is there a waiver there as well? If the answer is yes, then even small fry can go for the LiquidBEES.

 

[whyLately]

Re: About LiquidBeEs

To answer your query here it goes!

Point 1: Thats true for the people who have online trading account but how what about the investors who dont have a online trading a/c and transact through broker / agent? Also Liquid BeES has tied up with more than 60 recognized DPs who have waived off the brokerage charges and have made this product virtually free of cost

...

Thank you for your informative response.

After reading it, I realize that Liquid BeEs is not for me. For a small investor, managing a clutch of lakhs, there seems to be little advantage.

Currently, with low interest rates, and returns of less than 4% p.a. from them as reported by Value Research, funds may as well remain in the bank account. Also, HDFC, through which they were bought, does not waive brokerage/demat charges. Not the least, the idea of an additional accounting interface to manage fractional units is unattractive.

Will mark it as another avoidable experiment.

It is certainly interesting to see the bid-ask of 999.99 and 1000.01 and how folks will hang on for the chance of the extra 0.001%.

 

[manalisharma12]

Is the ETF unit price affected by supply and demand just like the cash market? Or are there any other factors too?

ETF price is affected by demand and supply just like any other stock that trades. However, an ETF like Nifty BeES will never trade at a substantial premium or discount to its fair value as market makers will always step in to extract the arbitrage. Hence, the best thing about ETFs is that you will always buy and sell it at close to its fair value.

 

[khin007]

Investing in gold for indian through nse stock market

How can invest in Gold ETF in india ?

The easiest method is to buy gold from the stock market . Buying is similar to buying stocks . Here are the NSE listed Gold ETFs. Call your share brocker and ask him to buy units of any of them below. Each unit =1 gm price of gold in the market .The only difference is they are managed by different companies. And there will be slight chage in price per unit .

* GOLDBEES : its the most famous among them

* GOLDSHARE

* KOTAKGOLD

* RELGOLD

* SBIGETS

Hello!
I invest in MFs as a 'DIRECT' investor.
I also have a DMAT+Trading Acc wid India Infoline.
I want to invest in Index Funds. Kindly tell the exact procedure- step by step?
Apart from Sensex, Nifty, banking-bees; can one invest in other Index Funds also? plz describe in detail!
Thanks in advance!
rm420