How to Invest in NIFTY 50 Zerodha via ETFs or MFs? (2024)

FAQs

How to invest in Nifty 50 through Zerodha? ›

The returns of the ETF are slightly higher than the returns of the index fund. Let's look at their expense ratio and their tracking error too. From the above tables, Nippon India ETF NIFTY 50 BeES has a lower tracking error, lower expense ratio, and slightly higher returns.

ETFs can be more tax-efficient than actively managed funds due to lower turnover and fewer capital gains. ETFs are bought and sold on an exchange at different prices throughout the day while mutual funds can be bought or sold only once a day at one price.

ETFs at Zerodha: Zerodha provides every customer a brilliant opportunity to buy/sell ETFs using our trading platform, reducing costs and increasing profitability. Currently we provide CNC benefit to all our clients on ETFs.

Now, there are two ways to invest in NIFTY 50. One, buy stocks directly in the same percentage as their weightage in NIFTY 50. The second option is to invest in Index Mutual Funds that track NIFTY 50. These index Mutual Funds replicate the NIFTY 50, i.e., have a portfolio precisely like the index.

Once the investor has narrowed down the above, they can choose to invest in ETFs vs mutual funds based on their requirements. For some investors, liquid investments take precedence over long term investments. Exchange Traded Fund (ETFs) offer more flexibility and better returns in the short term.

ETFs offer you more flexibility and higher returns in the short-run while mutual funds require you to stay invested for a comparatively extended period but help create a corpus for the future. The decision has to be entirely yours but must be taken after careful consideration.

While actively managed funds may outperform ETFs in the short term, long-term results tell a different story. Between the higher expense ratios and the unlikelihood of beating the market over and over again, actively managed mutual funds often realize lower returns compared to ETFs over the long term.

How many MFS should I invest in? ›

For equity mutual funds, a blend of 5 to 7 mutual funds across the broad categories of large cap, mid cap and small cap funds should give you sufficient exposure.

You don't need more than four to six schemes to diversify your portfolio. If you are investing a small amount, you don't need to invest in more than one or two schemes. Investing in every mutual fund category will not offer you the best return or diversification.

NRIs are allowed to Invest in Exchange Traded Funds (ETFs). NRIs can invest in ETFs both on repatriation as well as non repatriation basis.

The cost of investing in an ETF is very low

Since the ETF tracks the Nifty 50 index passively and there is limited or no churn in the index constituents, costs are low.

To have access to the Indian stock market from the US, you will have to either open an account with an international brokerage firm regulated by the U.S. Securities and Exchange Commission (SEC) or open an account with a SEBI-registered Indian stockbroker.

How are ETFs and mutual funds different? How are they managed? While they can be actively or passively managed by fund managers, most ETFs are passive investments pegged to the performance of a particular index. Mutual funds come in both active and indexed varieties, but most are actively managed.

One to two hours of the stock market being open is the best time frame for intraday trading. However, most stock market trading channels open from 9:15 am in India.

Index: To add Nifty indices such as Nifty 50, Banknifty or Nifty Financial Services type Index followed by the name of the index. To add Nifty Financial Services, type Index Nifty Fin Service and click on +. Futures contract: Search the trading symbol followed by a space and then the month followed by Fut.

What is the minimum investment in NIFTY 50? ›

The chief advantage of mutual funds that cannot be found in ETFs is variety. There is a virtually unlimited number of mutual funds available for all different types of investment strategies, risk tolerance levels and asset types.

If you're paying fees for a fund with a high expense ratio or finding yourself paying too much in taxes each year because of undesired capital gains distributions, switching to ETFs is likely the right choice for you.

In terms of safety, neither the mutual fund nor the ETF is safer than the other due to its structure. Safety is determined by what the fund itself owns. Stocks are usually riskier than bonds and corporate bonds come with somewhat more risk than U.S. government bonds.

ETFs expense ratios generally are lower than mutual funds, particularly when compared to actively managed mutual funds that invest a good deal in research to find the best investments. And ETFs do not have 12b-1 fees.

Most ETFs have attractively low expenses compared to actively managed mutual funds and, to a lesser extent, passively managed index mutual funds. ETF expenses are usually stated in terms of a fund's operating expense ratio (OER).

ETFs are very safe and are an excellent option for long-term investments. According to experts, ETFs are not that volatile and show a slight change in their prices compared to stocks and indices because they are diversified and pooled investments of many investors.

Just as with individual securities, when you sell shares of a mutual fund or ETF (exchange-traded fund) for a profit, you'll owe taxes on that "realized gain." But you may also owe taxes if the fund realizes a gain by selling a security for more than the original purchase price—even if you haven't sold any shares.

Holding period:

The date you pay for the stock, which may be several days after the trade date for the purchase, and the settlement date, which may be several days after trade date for the sale, do not impact your holding period. If you hold ETF shares for one year or less, then gain is short-term capital gain.

ETFs tend to be less volatile than individual stocks, meaning your investment won't swing in value as much. The best ETFs have low expense ratios, the fund's cost as a percentage of your investment. The best may charge only a few dollars annually for every $10,000 invested.

Is investing in ETFs enough? ›

For many investors, ETFs are a good investment. They provide an investor with a simple means for diversification, saving them from buying tens or hundreds of individual stocks. Most ETFs track major indexes, meaning they offer investors returns equal to overall market performance at just about the lowest possible cost.

Those funds can trade up to sharp premiums, and if you buy an ETF trading at a significant premium, you should expect to lose money when you sell. In general, ETFs do what they say they do and they do it well. But to say that there are no risks is to ignore reality.

There are many ways an ETF can stray from its intended index. That tracking error can be a cost to investors. Indexes do not hold cash but ETFs do, so a certain amount of tracking error in an ETF is expected. Fund managers generally hold some cash in a fund to pay administrative expenses and management fees.

Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification. But the number of ETFs is not what you should be looking at. Rather, you should consider the number of different sources of risk you are getting with those ETFs.

Generally speaking, fewer than 10 ETFs are likely enough to diversify your portfolio, but this will vary depending on your financial goals, ranging from retirement savings to income generation. When building a portfolio of ETFs, it is crucial to consider your investment strategy, objectives, and risk tolerance.

You don't need more than four to six schemes to diversify your portfolio. If you are investing a small amount, you don't need to invest in more than one or two schemes. Investing in every mutual fund category will not offer you the best return or diversification.

The 2% rule is an investing strategy where an investor risks no more than 2% of their available capital on any single trade. To apply the 2% rule, an investor must first determine their available capital, taking into account any future fees or commissions that may arise from trading.

Mutual Funds: An Overview

Disadvantages include high expense ratios and sales charges, management abuses, tax inefficiency, and poor trade execution.

1 – Never lose money. Let's kick it off with some timeless advice from legendary investor Warren Buffett, who said “Rule No. 1 is never lose money.

If you hold the funds for more than three years, you will pay a 20% tax on the long-term capital gains, including indexation benefit. Capital gains from un-listed mutual funds will be taxed at 10%, excluding indexation benefits.

Can NRI invest in MF Zerodha? ›

Yes, NRIs can invest in mutual funds through Coin provided they have a non-PIS NRI account with Zerodha.

The process of mutual fund investments (those who are not from the USA and Canada) are just as easy for NRIs as they are for locals in India. You have to invest via a Non-Resident Externa (NRE) or Non-Resident Ordinary (NRO) denominated account of any bank in India.

ETFs pay out, on a pro-rata basis, the full amount of a dividend that comes from the underlying stocks held in the ETF.

The Mirae Asset NIFTY 50 ETF (MAN50ETF) aims to replicate the portfolio and performance of NIFTY 50 TRI Index, which consist of 50 Blue chip companies listed on National Stock Exchange.

Nifty 50 is an Index comprising of 50 stocks and can't be bought. In order to buy the Index, you'll have to buy the constituent 50 stocks in the same weightage as they hold on the Index. Alternatively, you can also buy NiftyBees, the ETF on the Index which will replicate the performance of the Index.

Nifty 50 ETF can be bought by any investor on stock exchanges using a broking and demat account. It can be bought live during trading hours and scores over an index fund, which is bought at only the day-end NAV.

At the top of the box, you can select the exchange: BSE or NSE. 'Regular order' is already selected, don't change it. Intraday (MIS): If you wish to buy the shares and sell it on the same day, then select this option.

Can I buy 75000 quantity of Nifty options in a single order Zerodha? ›

The maximum quantity allowed per order is 100000 as per Zerodha's risk management policy. Orders that exceed these limits are rejected.

The lot size for NIFTY50 is 50 shares. So, traders can only buy it in the multiple of 50 only.

1. Current NAV: The Current Net Asset Value of the HDFC Index Fund Nifty 50 Plan as of Mar 10, 2023 is Rs 161.80 for Growth option of its Regular plan. 2. Returns: Its trailing returns over different time periods are: -5.5% (1yr), 15.22% (3yr), 11.65% (5yr) and 14.6% (since launch).

NIFTY Options Trading – In a NIFTY options contract, buyers and sellers agree to purchase or sell the Nifty contract at an agreed price on a future date. Here, the option buyers are not compelled to exercise their right of buying and selling. If they do not want to exercise their right, they can choose not to.

The lot size of nifty is 50. When you buy a lot of nifty, you get 50 shares of it. This means that you can trade in nifty derivatives only in the multiples of 50.

₹100 per order for futures and options. For a non-PIS account, 0.5% or ₹100 per executed order for equity (whichever is lower). For a PIS account, 0.5% or ₹200 per executed order for equity (whichever is lower).