Invest Wisely: Nifty Junior Etf Guide

The Nifty Junior Index, also known as the Nifty Next 50, is an index of large-cap stocks from the Nifty 100, excluding the stocks of the Nifty 50. It is a diversified index, representing approximately 12.02% of the free-float market capitalization of the 1600 stocks listed on the National Stock Exchange of India (NSE) as of March 31, 2015. The Nifty Junior Index includes the top 50 companies listed on the NSE after the Nifty 50. Investors can gain exposure to the Nifty Junior Index through Exchange-Traded Funds (ETFs). One popular ETF that tracks the Nifty Junior Index is the Nippon India ETF Nifty Next 50 Junior BeES. This ETF aims to provide returns that closely correspond to the returns of securities represented by the Nifty Next 50 Index. In this paragraph, we will explore the topic of how to invest in the Nifty Junior ETF, including the different investment options available and the potential benefits and risks of investing in this ETF.

What is the Nifty Junior Index?

The Nifty Junior Index, also known as the Nifty Next 50, is an index of large-cap stocks from the Nifty 100, excluding the stocks of the Nifty 50. It is a weighted average of the top 50 liquid and well-capitalized stocks listed on the NSE, representing approximately 12.02% of the free-float market capitalization of the 1600 stocks listed on the National Stock Exchange as of March 31, 2015. This index is a comprehensive benchmark, providing efficient exposure to the Indian market through a single portfolio.

The Nifty Junior Index is owned and operated by NSE Indices Limited and is identified by the symbol NSMIDCP. As of October 29, 2021, the index consists of stocks from 17 different sectors, offering greater diversification than the Nifty 50, which includes stocks from 13 sectors. The Nifty Junior Index was launched on December 24, 1996, with a base date of November 4, 1996.

The Nifty Junior Index is regarded as an incubator for the Nifty 50 index. As the market capitalization of companies changes, firms listed in the Nifty Junior Index are moved up to the Nifty 50. This means that any new companies that make it into the Nifty 50 are likely to have come from the Nifty Junior Index.

The Nifty Junior Index has consistently delivered strong returns. Over the last 10 years, it provided investors with an absolute return of 377.82%, while the Nifty 50 returned 275.21%. Even in the short term, the Nifty Junior Index outperformed the Nifty 50; its one-year absolute return was 27.32% compared to 25.36% for the Nifty 50 as of January 13, 2022.

How does it compare to the Nifty 50?

The Nifty Junior Index, also known as the Nifty Next 50, is a diversified index that consists of large-cap stocks from the Nifty 100 after excluding the stocks of the Nifty 50. As of December 31, 2021, the top 5 stocks in the Nifty Junior Index constituted 19.11% of the total index weight, compared to 41.49% in the Nifty 50 index. The Nifty Junior Index is considered an incubator for the Nifty 50, as companies listed in the former can move up to the latter as their market capitalization changes.

In terms of sector diversification, the Nifty Junior Index includes stocks from 17 different sectors, compared to 13 sectors in the Nifty 50. This makes the Nifty Junior Index a more diversified option for investors.

When it comes to performance, the Nifty Junior Index has consistently outperformed the Nifty 50 in the long and short term. In the last 10 years, it provided investors with an absolute return of 377.82%, while the Nifty 50 returned 275.21%. As of January 13, 2022, the Nifty Junior Index's one-year absolute return was 27.32% compared to 25.36% for the Nifty 50.

However, it is important to note that investing in the Nifty Junior Index through ETFs may come with additional charges such as transaction costs, GST on transaction charges, SEBI charges, and stamp duty. These charges can reduce the overall returns for investors.

In summary, the Nifty Junior Index offers a more diversified investment option compared to the Nifty 50, with a higher number of sectors represented. It has also historically outperformed the Nifty 50 in terms of returns. However, investors considering investing in the Nifty Junior Index through ETFs should be aware of the additional charges associated with ETF trading.

What are the characteristics of the Nifty Junior Index?

The Nifty Junior Index, also known as the Nifty Next 50, is a stock market index that consists of large-cap stocks. It is a weighted average of the top 50 liquid and well-capitalized stocks listed on the NSE, excluding the Nifty 50 companies. As of December 31, 2021, the top 5 stocks in the index made up 19.11% of the total index weight, while the Nifty 50 index's top 5 stocks constituted 41.49%.

The Nifty Junior Index is more diversified than the Nifty 50, with stocks from 17 different sectors of the Indian economy, compared to 13 sectors in the Nifty 50. It represents approximately 12.02% of the free-float market capitalization of the 1600 stocks listed on the National Stock Exchange as of March 31, 2015. The index is owned and operated by NSE Indices Limited and is identified by the symbol NSMIDCP.

The Nifty Junior Index is considered an incubator for the Nifty 50 index. As companies' market capitalizations change, firms listed in the Junior Nifty are moved up to the Nifty 50. This means that any new companies that join the Nifty 50 are likely to have come from the Junior Nifty.

The Nifty Junior Index has consistently outperformed the Nifty 50 in terms of returns. Over the last 10 years, it provided investors with an absolute return of 377.82%, compared to 275.21% for the Nifty 50. Even in the short term, the Junior Nifty outperforms the Nifty, with a one-year absolute return of 27.32% compared to 25.36% for the Nifty 50 as of January 13, 2022.

How to invest in the Nifty Junior Index

The Nifty Junior Index, also known as the Nifty Next 50, is a weighted average of the top 50 liquid and well-capitalized stocks listed on the NSE, excluding the Nifty 50 companies. It represents approximately 12.02% of the free-float market capitalization of the 1600 stocks listed on the National Stock Exchange as of March 31, 2015.

If you want to invest in the Nifty Junior Index, you can do so through index funds or Exchange-Traded Funds (ETFs). Here are the steps you can follow:

Step 1: Understanding the Nifty Junior Index

Before investing, it is important to understand the characteristics of the Nifty Junior Index. It consists of large-cap stocks from the Nifty 100 index, excluding the Nifty 50 companies. The index is well-diversified, with stocks from 17 different sectors of the Indian economy. As of December 31, 2021, the top 5 stocks in the index constituted 19.11% of the total index weight.

Step 2: Choosing an Investment Vehicle

You can invest in the Nifty Junior Index through index funds or ETFs. Index funds are a type of mutual fund that tracks the performance of an index, such as the Nifty Junior Index. ETFs, on the other hand, are funds that are traded on an exchange and can be bought and sold like stocks. Both options offer a diversified investment in the Nifty Junior Index.

Step 3: Selecting a Fund

When choosing an index fund or ETF, it is important to consider the fund's performance, fees, and reputation. The Nippon India ETF Nifty Next 50 Junior BeES is a popular and actively traded Nifty Junior ETF. Other options include the SBI ETF Nifty Next 50, UTI Nifty Next 50 ETF, and ICICI Prudential Nifty Next 50 ETF.

Step 4: Opening an Investment Account

To invest in index funds or ETFs, you will need to open an investment account with a broker or financial institution. This may require providing personal and financial information and making an initial deposit. Be sure to research the requirements and fees associated with different investment accounts.

Step 5: Placing Your Investment

Once your account is set up, you can place your investment in the Nifty Junior Index. You can choose to invest a lump sum or through a Systematic Investment Plan (SIP). When investing through an ETF, you may need a demat account.

By following these steps, you can gain exposure to the Nifty Junior Index and its potential benefits, such as diversification and strong returns. Remember to consider your investment goals and risk tolerance before investing and consult with a financial adviser if needed.

What are the risks and benefits?

The Nifty Next 50 Index, also known as the Junior Nifty or Junior Bees, is a compelling investment opportunity for those seeking to diversify their portfolios and maximise returns. It is a diversified index, both sector-wise and equity-wise, providing efficient exposure to the Indian market through a single portfolio.

Benefits

• Strong Returns: The Junior Nifty has consistently outperformed the Nifty 50 in the short and long term. In the last 10 years, it provided investors with an absolute return of 377.82%, while the Nifty 50 returned 275.21%.
• Low Expense Ratio: The Nippon India Nifty Next 50 Fund, commonly known as Junior Bees, has an expense ratio of only 0.17%, making it a cost-effective option.
• Performance: Junior Bees mirrors the returns of the Nifty Next 50, providing a reliable benchmark.
• Liquidity: Junior Bees can be quickly bought and sold on the exchange like regular shares, offering flexibility and ease of trading.
• No Exit Load: Investors can exit without additional fees.
• Passive Income: It provides a passive investment option, tracking the index without active management.
• Diversification: The Junior Nifty consists of stocks from 17 different sectors, offering greater diversification than the Nifty 50, which includes stocks from 13 sectors.
• Incubator for Nifty 50: The Junior Nifty is regarded as an incubator for the Nifty 50. As companies' market capitalisation changes, listed firms in the Junior Nifty are bumped up to the Nifty 50, making it a great way to invest in potential Nifty 50 companies.

Risks

• Moderately Higher Risk: The Nifty Next 50 has a slightly higher risk-reward ratio than the Nifty 50, meaning that while the potential for returns is higher, the associated risk is also moderately higher.
• Volatility: While ETFs combine the benefits of stocks and mutual funds, they are still subject to the volatility of the underlying stocks.
• Tracking Error: While the scheme aims to closely correspond to the returns of the Nifty Next 50 Index, there may be a tracking error, and there is no assurance that the investment objective will be achieved.

Frequently asked questions