Invest Smart: Nifty 50 ETF offers low-cost access to market leaders
What is the Nifty 50 ETF?
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Why choose the Nifty 50 ETF?
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If you're new to investing in stock markets or an NRI looking to invest in India or a millennial trying to make smarter financial choices , starting your journey can feel overwhelming. Investment decisions can be challenging, especially in times of market volatility . Over the past six months, markets have experienced increased volatility, leaving many investors uncertain about the best course of action.The uncertainty often leads to tough choices, with the fear of making the wrong decision causing hesitation. However, it's important to remember that volatility is a natural part of investing and the key lies in maintaining a long-term perspective.While short-term ups and downs can be unsettling, staying focused on your financial goals and making informed, disciplined investment choices can help you navigate this uncertainty.The good news? Getting started with investing doesn't have to be expensive or complicated. You don't need to pick individual stocks or track the market daily to grow your money. Taking the passive route is advisable as you get to replicate a benchmark index and one of the simplest and most effective ways to begin is through the Nifty 50 ETF (Exchange Traded Fund). Nifty 50 ETF is a low-cost investment product that lets you own a small piece of India's 50 largest listed companies, all in one go. These stocks include blue-chips and industry leaders across 15 key sectors. The ETF simply mirrors the Nifty 50 index, which means your investment automatically follows the performance of India's top-50 biggest, most reliable companies. The Nifty 50 index, which completed 29 years last month, is the most popular benchmark index, representing a diversified portfolio of India's 50 largest companies by market capitalisation. As of April 21, 2025, Nifty 50 has delivered a compound annual growth rate (CAGR) of 12.93% since inception.Large-caps, with their reliable performance, solid cash flows, profitability & market advantages are essential for long-term portfolios, making the Nifty 50 index an excellent option for retail investors.If you're looking to invest in Nifty 50, choosing an ETF is a smart and hassle-free option. Nifty 50 ETFs come with various benefits that make them an attractive choice for investors. A key feature is their low cost because of lower expense ratios. Since ETFs are passively managed, there are no fund manager fees eating into your returns.Since ETFs track the entire Nifty 50 index, you are automatically investing in a diversified set of stocks, without the need to pick individual stocks yourself and minimising the risk of bad stock selection.One of the biggest advantages of investing in a Nifty 50 ETF is its affordability. Nifty 50 ETF lets you own a slice of India's top 50 companies with just a few hundred rupees.Further, the index itself is re-balanced every six months, ensuring that it accurately reflects India's top-performing companies. This ensures your investment stays aligned with the top-performing companies in the market, all without the need for constant monitoring.Another great feature is their high liquidity, which allows you to buy and sell ETF units through demat & trading accounts just like stocks during market hours. This provides flexibility, giving you greater control over your investments.Investing in a Nifty 50 ETF becomes even more relevant in the current market scenario. The Index's price-to-earnings (PE) ratio has dropped from 24.5 times in September 2024 to 22.4 times in May 2025, making it more attractive from a valuation perspective. This decrease presents a good opportunity for investors to enter the market at a lower valuation.Nifty 50 ETF offers an easy, low-cost, hands-off, efficient and risk-free way to invest in some of the best blue-chips in India, with the added benefits of liquidity and diversification.For NRIs, the Nifty 50 ETF offers a simple way to invest in India's growth without managing a large portfolio. It's also an ideal entry point for millennials & beginners providing low-cost exposure to top businesses and long-term growth.(Author of the article Chintan Haria is Principal - Investment Strategy at ICICI Prudential AMC)(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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