The National Stock Exchange (NSE) ranks the top 50 companies based on free-float market capitalization choosing to be a part of the Nifty 50. These top 50 companies are the most reputed and largest stocks in the country. When you invest in the nifty index, you are investing in the top companies of India. Hence, there should not be doubt about the advantages. In this blog, we shall discuss the advantages of investing in the nifty index.
- Minimum investment: The foremost advantage of investing in Nifty 50 is minimum investment. Multiple investors pool their money in Index funds that lower the amount of investment. A minimum amount of INR 500 monthly in SIPs is enough to invest in all 50 stocks in the same proportion. Therefore, you can invest in the top 50 companies in the country with a minimum investment. Moreover, these investments provide the flexibility to increase investment according to investors’ convenience. You can experience a hassle-free investment through the Nifty index.
- Lower expense ratio: One of the crucial advantages of investing in Nifty 50 is the lower expense ratio. A board benchmark is always tracked by Index funds which helps the fund manager to replicate the benchmark and rebalance the holdings. Thus, the role of the fund manager gets simplified which reduces the cost of fund management. Thus, the expense ratio gets lower than in an active mutual fund.
- Portfolio management: Investing in the Nifty 50 requires portfolio management to manage your investments. But you do not have to handle and maintain this procedure. The professional fund manager will manage your holdings and rebalance the stocks. The fund manager can increase and decrease your holdings in the same proportion in the Nifty 50 index. Since the fund manager is not liable for market performance, it is easier for them to manage and rebalance the stocks periodically.
- No bias in investing: Since it is an automated, regulation-based investment method, you will not find biased investments in the Nifty index. It is quite a straightforward procedure. The fund manager follows a defined mandate of the costs to be put in for investment in various stocks of the Nifty 50 index. This ensures no human discretion while investing in stocks. The portfolio management replicates the benchmark of the Nifty index. This is one of the best advantages of investing in the Nifty 50 index. Eliminating human bias from investment settlements makes it preferable for investors.
- Broad market exposure: You can ensure diversification across all sectors and stocks by investing in the Nifty index fund. Therefore, you can enjoy broad market exposure from pharma to financial services in 50 stocks of 13 sectors. This is a great opportunity for investors to experience investment exposure in a larger segment of the market through a small proportion of index funds.
Conclusion: You can acquire the mentioned advantages by investing in the Nifty 50 Index. Nothing can be better than investing in the top 50 companies of India, ranked by NSE. Since these funds are managed by the fund manager, you do not have to monitor your portfolio all the time. You can also invest in the nifty small cap index fund for a better return. For easy, quick and secure investment in index funds, no other online portals are better than 5paisa.