Saturday, October 11, 2008

Weak people continue to smoke

So after the government of India's ban of smoking in public places - and its just backing of the Supreme Court - it remains to been how successful this ban really is. As much in favour of this ban as I am, I must admit that it is an incomplete one. Sale of gutka, tobacco and pan masala is on and these packets are openly available at road side stalls. Atleast cigarettes do not deface the city like the way paan, tobacco, gutka and pan masala consumers deface the city with stains caused by spitting the remains. 

Meanwhile, the ban on smoking has little effect. In the absence of strong policing about this - policing here is most required rather than wasting time in such things like moral policing - smokers continue to puff away. My own office colleagues continue to smoke in building corridors as if nothing has changed. What's more shameful is that they make lame excuses that why couldn't the government ban prostitution rather than smoking or that they are smoking in between 'public places' (referring to the staircase area between the two floor of a building) or why can't the government concentrate on poverty or unemployment instead of smoking and many more such lame excuses that I consider it a waste of time even remembering them. I wonder whether they realise that the 'joke' is on them, and not on others. 

Unfortunately, I do not blame them. Smokers are weak people. When you puff away cigarettes with regular ease, cigarettes control you and not vice-versa. It takes courage to give away the addiction of smoking which unfortunately, not many people have. 

Wednesday, October 8, 2008

Invest in Benchmark's Nifty BeES

Buying an index at these levels offers a great opportunity to make good, long-term gains

The turmoil in the US equity markets has had a devastating effect globally and also the Indian equity markets. Sensex has dropped nearly 40 per cent from its highest closing on 8 January. Ideally, when there’s mayhem and bloodshed everywhere and equity prices are dropping, it’s a good opportunity to buy equities at cheaper levels. And what better way to enter the equity markets – if you haven’t already or were waiting for the right time buy – than buying the index itself? Take a look Benchmark Nifty BeES. 

About the fund

Nifty BeES is an exchange-traded fund (ETF) that passively tracks the Nifty index. Like an index fund, ETFs invest their entire corpuses – save a small percentage that it keeps aside as cash – in all the stocks and in exactly the same proportion as they lie in their benchmark indices. Launched in December 2001, Nifty BeES was India’s first exchange-traded fund and comes from a fund house (Benchmark mutual fund) that specialises and manages only exchange-traded funds.

 The Nifty index consists of the 50 most liquid stocks on the national stock exchange. The companies that form a part of Nifty are also considered to be amongst India’s largest and most well-managed companies. Since the value of Nifty BeES will always move in tandem to that of the Nifty, one unit of Nifty BeES will be approximately one-tenth the value of Nifty index. For instance, on 29 September while Nifty closed at 3,850.05, Nifty BeES closed at 387.48. Over the past one year, the difference between its net asset value (NAV) and market price has been 0.04 per cent on an average. 

Why does an ETF make sense?

Typically, an index fund too tracks the index passively and there are a dozen of them in the Indian mutual funds industry. However, I have always recommended that you buy an ETF instead of an index fund. Here’s why.

 Low cost

As Nifty BeES is a passively-managed fund, its expense ratio is much lesser as compared to actively-managed funds that charge as high as 2.50 per cent. Further due to the structure of an ETF, its expense ratio is also lower than traditional index funds. As against index funds that charge as high as 1.50 per cent, Nifty BeES scores over them as well. At 0.50 per cent, its cost structure is the second lowest – after Reliance Banking ETF – amongst equity schemes in the market today.

 Low tracking error

The TE of an index fund is essentially the difference in returns generated by itself and its own benchmark index. The lower the TE, the better is the index fund.

 A low expense ratio and an ETF’s structure are responsible for a low tracking error for Nifty BeES (0.33 per cent as on 31 August). Nifty BeES’s TE is the least amongst all passive funds.

 Anytime trading

Unlike a typical MF scheme that can be bought or sold only at the end of the day’s NAV, you could buy Nifty BeES throughout the day, during market hours.

 How to buy?

You need a demat account to buy Nifty BeES. Also enroll with a stock broker who transacts on the NSE; there are close to 50,000 NSE terminals throughout the country.

There’s no telling as to when the carnage on the stock markets will stop. Already stock market experts are predicting that the worse is not yet over. It’s tough to predict the exact bottom levels; we suggest that you allocate around 50 per cent of your total ETF allocation now. As markets fall further, you can continue to deploy more money in Nifty BeES. 

Canadian Rockies: Day 11-13 (Vancouver highlights)

On day #11, I took the ferry and came to Vancouver. Much of Vancouver is filled with Asians. The whole 36 km distance between Tsawwassen Fe...