Nifty ETF Junior or Nifty Next 50 always outperforms Nifty ETF or Nifty 50. Let me share why so retail investors invest in Nifty Junior ETF over Nifty ETF
Nifty ETF Junior is bound to outperform Nifty ETF for many reasons. Do you want to know how and why?
Let me first explain both in brief.
What is Nifty ETF?
An ETF or exchange-traded fund combines the best of both a mutual fund and the stocks.
The best part about stocks trading in the market is, one can get in and out of stock at any given point in time when trading is ON in the exchanges. However, one can’t do the same in mutual funds. The NAV is for a day and is updated late at night.
The best part about mutual funds is, they remove the volatility of the stocks and provide the much-needed diversification.
An ETF or exchange-traded fund takes the best of both. It opens up the trading for an underlying index via a fund known as ETF.
Nifty ETF is an exchange-traded fund for the Nifty.
Each fund house has its Nifty ETF. Because the performance of the fund is based on the Nifty index, the best ETF is the one that is more actively traded.
What is Nifty ETF Junior?
Nifty includes the top 50 companies listed on the National stock exchange or NSE. The Nifty Junior Index is also known as the NIFTY Next 50 includes companies after the NIFTY 50.
Nifty, also known as CNX Nifty. Similarly, Nifty Junior is also known as CNX Nifty Junior.
Nifty and Nifty Junior together include the top 100 companies listed in NSE India.
Nifty ETF Junior is an exchange-traded fund for Nifty Junior Index.
Only a handful of fund houses have Nifty junior ETF. The most actively traded is Nippon India ETF Junior BeES.
Nifty ETF vs. Nifty ETF Junior
Now we know what Nifty ETF and Nifty ETF Junior are, but what is more important as an investor is to understand which one is a better choice as an investor.
It is always the Nifty Junior ETF. Let me first share why.
There are two types of stock movement between Nifty ETF and Nifty ETF Junior.
- Stock is in Nifty ETF Junior and outperforms to become part of Nifty ETF.
- Stock is in Nifty ETF and underperforms and is kicked out of Nifty ETF to become part of Nifty ETF Junior.
In either case, it is the Nifty ETF Junior, which benefits.
When a stock is performing better than the shares in the Nifty index, it gains market cap and helps outperform Nifty ETF Junior.
The stock that underperforms in Nifty ETF is kicked out. However, the Nifty ETF has to bare the underperformance of the company.
We can see the same in the chart of Nifty ETF Junior when compared to Nifty ETF.
The orange line in both the chart is Nifty.
The outperformance of Nifty ETF Junior is very clear. So any retail investor who wants to consider investing in a Nifty ETF should consider investing in Nifty ETF Junior over Nifty ETF for sure.