Mutual Funds Nifty BeES first ETF Benchmark

Nifty BeES (2001): India's first ETF

From WebNotes, a public knowledge base. Last updated 19 May 2026. Reading time ~4 min.

Nifty Benchmark Exchange Traded Scheme (Nifty BeES), launched by Benchmark Asset Management in December 2001, was India’s first exchange-traded fund (ETF). The scheme tracked the NIFTY 50 index and laid the foundation for the Indian ETF segment, which has since grown from a single scheme in 2001 to over Rs 5 lakh crore in AUM by the mid-2020s, representing a major segment of the Indian mutual fund industry.

For the Indian mutual fund industry, Nifty BeES marked the introduction of a passive, exchange-listed investment vehicle that combined the diversification of mutual funds with the trading flexibility of stocks. The scheme established the operational and regulatory framework that subsequent Indian ETFs would follow.

Launch context

Indian capital markets in 2001

By 2001:

The NIFTY 50 index, launched in 1995, had become a recognised benchmark.
The dot-com bust caused significant equity market disruption.
Investor interest in passive, lower-cost investment vehicles was emerging.

Benchmark Asset Management

Benchmark Asset Management:

A pioneering AMC focused on passive investing.
Subsequently acquired by Goldman Sachs (2011).
Eventually transitioned to other ownership over time.

Launch

Date: 28 December 2001.
Scheme: Nifty Benchmark Exchange Traded Scheme.
Listing: NSE (National Stock Exchange).
Index tracked: NIFTY 50.

Scheme structure

ETF mechanics

Nifty BeES introduced ETF mechanics to Indian markets:

Listed on NSE: Units trade on NSE during market hours.
Authorised Participants (APs): Market-makers can create / redeem units in large blocks.
NAV-tracking: Unit price follows underlying NIFTY 50 closely.
Lower expense ratio: Compared to active equity funds.
No load: No subscription or redemption load.

Comparison with traditional MFs

Dimension	Nifty BeES (ETF)	Traditional active MF
Trading	On NSE	AMC NAV-based only
Settlement	T+1 (then)	NAV applicable per cut-off
TER	Lower	Higher
Active management	None (passive)	Active stock selection
Tax treatment	Same as equity MF	Same as equity MF

Significance

Industry foundation

Nifty BeES established:

Operational framework for ETFs in India.
Authorised Participant mechanism.
Regulatory framework refinement.
Investor education on passive investing.

Subsequent ETF growth

After Nifty BeES, the Indian ETF segment grew through:

More NIFTY 50 ETFs (SBI, ICICI, Aditya Birla, etc.).
Sectoral ETFs (Banking, Pharma, IT).
International ETFs (S&P 500, Nasdaq 100).
Smart-beta ETFs (Low Volatility, Quality).
Gold ETFs.
Debt ETFs (G-Sec, corporate).

By 2025, Indian ETFs had crossed Rs 5 lakh crore AUM.

EPFO equity allocation

Subsequent EPFO equity ETF investment in Nifty BeES and similar ETFs has become a major driver of ETF AUM growth.

Long-term performance

Nifty BeES has performed in line with NIFTY 50 (its tracking index):

20-year CAGR (approximate): 13-14% (in line with NIFTY 50 TRI).
Low tracking error.
Consistent return delivery.

External references

References

SEBI approval documents for Nifty BeES.
NSE listing memoranda.
AMFI Best Practice Guidelines on ETFs.

Reviewed and published by

WebNotes Editorial Team

The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

Last reviewed: 19 May 2026
Conflicts of interest: WebNotes is independent. No relationship with any broker, registrar or bank named in this article.