Junior BeES

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Junior BeES
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Introduction to Junior BeES

• Second Exchange Traded Fund (ETF) from Benchmark
  Asset Management Company Pvt. Ltd.
• Combination of a share and a mutual fund unit
• Real-time Trading on NSE after the listing
• Will be available across 4000 NSE terminals in
  400 cities
• Tracks the CNX Nifty Junior Index (Currently no
  other index funds available on this index)
• Priced at 1/10th of the CNX Nifty Junior Index

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About Benchmark

• First AMC in India with focus on passive and
  quantitative asset management
• First AMC in Asia (ex Japan) to launch ETF, and
  only18th in the world
• Launched the first ETF in India Nifty BeES
• Run by a team of professionals with vast
  experience in companies like Merrill Lynch,
  CRISIL, Salomon Smith Barney, etc.

• Directors of Trustee Co.
• Dr. S.A. Dave Dr. Manesh Shrikant
• Dr. Pravin P Shah
• Mr. Dakshesh Dhruv

• AMC Directors
• Mr.Dhirubhai Mehta
• Mr. Sevantilal Parekh
• Mr. Shripad Halbe
• Ms. Susan Thomas
• Mr. T.N.V. Ayyar

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About Nifty BeES Indias First ETF

• Listed on NSE and trading real-time since January
  8, 2002
• Recorded the lowest tracking error since launch
  (0.12) amongst all the index funds in the
  country
• Maximum Premium/Discount to NAV has been between
  -0.5 (Source Business Standard)
• Average Daily Traded Volume (as of Dec 31, 2002)
  23,400 units

Nifty BeES seems the best index fund when it
comes to all three parameters Entry loads,
Expense ratios and Tracking Error.It is Indias
first and only Exchange Traded Fund or simply
put, a next generation index fund. - Business
World, September 30, 2002 Investing in Nifty
BeES is a comparatively better method of
participating in any market rally - The
Economic Times, December 2, 2002
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About CNX Nifty Junior Index

• Scientifically developed index managed by IISL
  (NSE)
• Consists of the next rung of liquid securities
  after SP CNX Nifty
• CNX Nifty Junior was introduced on Jan. 1, 1997,
  with base date and base value being November 03,
  1996 and 1000 respectively
• Selection of the index set is based on two
  criteria
• Liquidity (Impact Cost)
• Market Capitalization
• Nifty Junior often acts as incubator for the
  stocks eligible for Nifty i.e. most of the stock
  included in Nifty are from Junior Nifty but this
  is not true other way around

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SP CNX Nifty Vs. CNX Nifty Junior
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SP CNX Nifty Vs. CNX Nifty Junior (cont)
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SP CNX Nifty Vs. CNX Nifty Junior (cont)
Nifty Junior is a higher risk higher return
index than Nifty
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SP CNX Nifty Vs. CNX Nifty Junior (cont)
Nifty Junior is a higher risk higher return
index than Nifty
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Junior BeES IPO

• IPO Start Date February 6, 2003
• IPO End Date February 14, 2003
• Minimum application Rs. 10,000
• Additional application Multiples of Rs. 1,000
• Allotment Price 1/10th of the CNX Nifty Junior
  Index as on the date of allotment

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History of ETFs

• First ETF came in 1993 on SP500 called SPDRs
• SPDRs and QQQs (ETF on Nasdaq 100) are the most
  actively traded ETFs
• Globally, there are currently 280 ETFs with 361
  listings on exchanges around the world
• On November 29 , 2002 the ETF market globally was
  142 billion (Source MSDW)
• ETFs launched across the world include Japan in
  September 2001 and in Korea and Singapore in
  2002
• Nearly 60 of trading volumes on American Stock
  Exchange comprises of ETFs

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Growth of ETFs
Source Bloomberg, Morgan Stanley Research
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How Junior BeES work
Secondary market
Primary market
Seller
Junior BeES
Cash
Authorised Participants / Financial Institutions
Buy / sell
NSE
Market making / Arbitrage
Creation in-kind
Redemption in-kind
Junior BeES
Cash
Buyer
Fund
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Index tracking a long term winner

• It has been proved that It is not possible to
  consistently outperform the overall stock market
• In the last 20 years, 85 of actively managed
  funds have under performed the SP 500 in US
• Due to this, approximately 25 of the invested
  assets in the U.S. is indexed
• Index tracking is relatively a cheaper strategy
  to implement
• Indices are dynamic, transparent and have high
  investor recall
• No fund manager risk, but pure equity market
  exposure

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Index tracking Indian Scenario
Source Crisil.com
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Junior BeES Advantages

• Simple Can be bought/ sold on NSE like a
  sharereal-time
• Economical No load scheme. Annual expense ratio
  including management fees is a maximum 1 of the
  daily average net assets. One of the lowest for
  any mutual fund scheme in India.
• Diversification Its a cost efficient way to
  invest in a basket of some of the most liquid
  mid-cap securities
• Equitable Structure Long term investors
  insulated from short term trading activity
• Transparent Investors have access to
  information on the portfolio constituents
  represented represented on a daily basis

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Junior BeES vs. Open ended Index funds
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