TLDR: ETF review, history, fund composition, return and why is it in my portfolio?

I have kicked-off this series as a review of the funds that i own in my portfolio and my justifications for them. I started off with the Reliance NIFTY junior ETF, you can read about it here.

The second fund I would like to review in this series is Reliance NIFTY BeES ETF.

History

Reliance NIFTY BeES started its journey as Goldman & Sachs NIFTY BeES benchmark ETF covering the Nifty 50 index before it was taken over by reliance. The original fund was launched in Dec 2001, so we have a good 18 year history of this fund for comparison. This fund is suited for someone who has an investment horizon of greater than 7 years.

Fund particulars

Let us talk some numbers as of Dec 2018

1. Fund AUM - 1,049 crores

2. Expense ratio - 0.11%

3. CAGR since launch (Dec 2001) - 15.67%

With a CAGR return of 15.67% since launch, this is a very good fund to have in your portfolio. Given the fact that this fund tracks the bluest of blue chip companies in India, you cannot really go wrong here.

Also compared to underlying index the difference in return is quite small even compared to TRI basis, the performance is fairly impressive.

SIP returns

So what would be the return of 10,000 rupees invested in this fund every month yield if invested for the last few years.

1. 10 Years - 1-Jan-2009 to 31-Dec-2018 - CAGR - 11.12%

   • Amount invested - 1,200,000.00

   • Value - 2,119,888.40

2. 7 years - 1-Jan-2012 to 31-Dec-2018 - CAGR - 11.72%

   • Amount invested - 840,000.00

   • Value - 1,263,849.58

3. 5 years - 1-Jan-2014 to 31-Dec-2018 - CAGR - 10.71%

   • Amount invested - 600,000.00

   • Value - 779,039.63

Data from moneycontrol.com

Alternatives

There are a good number of alternatives who would want to gain exposure to this index via Index funds instead of ETFs. Let me list direct funds below in alphabetical order.

• DSP Equal Nifty 50 Fund - AUM 122 crores - Expense ratio - 0.4%

• HDFC Nifty 50 fund - AUM 534 Crores - Expense ratio - 0.1%

• ICICI Prudential Nifty ETF - AUM 1018 crores - Expense ratio - 0.05%

• SBI ETF Nifty 50 - AUM 344 crores - Expense ratio - 0.25%

• UTI Nifty 50 - AUM 1098 Crores - Expense ratio - 0.1%

Rating

Based on the long term performance of this ETF, I would rate this fund 8/10.

Why only 8/10 - simple reason expenses. Not just the expense ratio but also the cost of acquisition and disposal of ETF (buy and sell via trading account) which is close 1% each leg. So total cost is close to 2.1%.

When this fund was originally launched in 2001 there was hardly any competition to this fund, but now there are several alternatives which track the same Index at much lower costs.

What are your thoughts on this fund? Would you consider this index (not this ETF itself) in your portfolio?