Let us understand how to find the best Nifty Index ETF to invest in 2021 based on average traded volume and expense ratio of the ETF
NIFTY, as an index, doubled from the low in 2020. Let’s find the best NIFTY Index ETF fund to invest in 2021 for those who don’t want to deal with stocks and aren’t satisfied with mutual funds returns.
When evaluating Index-based ETF funds, one has to look for the one that can replicate the index and has a higher volume to execute the trades when one wants to enter and exit.
Exchange-Traded Funds or ETF, unlike mutual funds, require a demat account and are traded like stocks. Mutual funds try to beat the index, whereas ETF replicates the index. Know all about ETF’s here.
Index funds aren’t to outperform or underperform the underlying index. All the Index ETFs will have the same performance over time with almost no variation (or very slight variation) to the index.
Available Nifty Index ETF in 2021
The vital criterion to select the best Nifty Index ETF to invest in is the average traded volume for the ETF. If the average traded volume is meagre, you may end up paying a lot more because of the lesser number of sellers available when you want to buy. Similarly, when you want to exit, the same may happen on the downside, and you end up getting a lot less price for the units.
We will use the NIFTY 50 Index ETF and have the following ETF’s for Nifty 50 Index.
| Symbol | Average Traded Volume |
|---|---|
| NIFTYEES | <500 |
| ICICINIFTY | >1,00,000 |
| KOTAKNIFTY | >20,000 |
| M50 | <1,000 |
| QNIFTY | <500 |
| IVZINNIFTY | <500 |
| SETFNIF50 | >1,00,000 |
| UTINIFTETF | <1,000 |
| BSLNIFTY | <1,000 |
| NIFTYBEES | 20,00,000 |
*Average traded volume data is per NSE Website. You can click the link in the table to visit the NSE website and check the day’s ETF traded volume.
The Best Nifty Index ETF Fund 2021
We should choose a Nifty Index ETF that has the maximum volume with minimum possible expense ratio.
Only 3 Nifty Index ETF has considerable quantity, aka ICICINIFTY, SETFNIF50, and NIFTYBEES.
As per ValueResearchOnline, NIFTYBEES and SETFNIF50 has an expense ratio of 0.05% 0,07% respectively. ICICINIFTY has a very high expense ratio.
Undoubtedly the best Nifty Index ETF fund to invest in 2021 is NIFTYBEES by Nippon India Mutual Fund. It has the best volume and low expense ratio for quite some time, so it will always remain the best Nifty-ETF.
Final Thoughts
As always, this isn’t a recommendation of any fund or ETF. The emphasis is on the process. The ETFs may be doing well now, but when you want to be investing, use the same process, and find the best ETF at that time to invest. Use ValueResearchOnline and NSE Website as and when you want to invest in 2021.
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