The stock market can give some great investment opportunities, but picking stocks isn’t easy. Choosing individual stocks to invest in can take time, and it can be hard — even professional fund managers struggle to beat their indexes as much as 95 percent of the time. So if regular stock market indexes perform better most of the time than professional fund mangers, is it not better to invest directly in the index itself? One way to do that is through JuniorBees.
What are JuniorBees?
Junior BeEs is an Exchange Traded Fund that tracks the Nifty Next 50 index. This means that JuniorBees can be bought and sold like a normal stock, and their value tracks the value of the Nifty Next 50 index. While the Nifty broadly includes the top 50 listed companies in India ordered by their market capitalization, the Nifty Next 50 includes the next 50 biggest companies in terms of market capitalization. As such, Nifty Next 50 tracks the 50 biggest companies in India which aren’t in the Nifty 50. JuniorBees is an index fund that tracks the Nifty Next 50.
The current value of a single share of JuniorBees is Rs. 276. Reliance Junior BeEs was founded in 2003; since then, it has given annual returns of around 20 percent on average, which are significantly higher than the returns on FDs, and many mutual funds.
NiftyBees vs JuniorBees
The NiftyBees funds track the Nifty; the JuniorBees track the Nifty Next 50. As NiftyBees tracks bigger companies than the Nifty Next 50, you’d expect it to be less risky, but also give lower returns than JuniorBees. JuniorBees can be a good investment option for those who want to invest in an index fund, but want have slightly higher risk appetite than investing in Niftybees. In fact, NiftyBees and JuniorBees can also be used together — both these funds can be a part of a balanced index portfolio.
Advantages of JuniorBees
- Lower expenses and fees than most mutual funds: Actively managed mutual funds require fund managers to pick and choose stocks, and they charge money for the service. An index fund like the JuniorBees only tracks an index, so its expenses and fees are generally lower than mutual funds.
- Saves time: Instead of picking individual stock or a mutual fund, simply investing in JuniorBees give you exposure to the 51-100 ranked companies in India.
- Low risk: JuniorBees are a combination of 50 different stocks, so have lower risk than investing in individual stocks, whose values might fluctuate quite a bit.
- Reasonably high returns: The Reliance Junior BeEs ETF claims to have a 20% return since its inception in 2003. These are high returns for any mutual fund or stock.
Who should invest in JuniorBees
JuniorBees can be a part of most long-term portfolios. Theoretically, they should provide slightly higher returns than Niftybees, and be slightly more risky. Conservative investors who would want to take on some extra risk can add JuniorBees to their portfolios. JuniorBees are also good candidates for SIPs — good investment outcomes can be achieved if one regularly buys JuniorBees over a long period of time.
How to invest in NiftyBees?
Investing in JuniorBees is like investing in any other stock. Most brokers would give you an option to buy JuniorBees. JuniorBees can be bought just like ordinary stocks at the prevailing price of JuniorBees.