How Do I Earn Dividends by Investing in Nippon India ETF Nifty 50 Bees and Midcap 150 Bees?

Ans: the ex date is yet not announce by the company, so once its announced you will get the dividend post that date on the condition that the stock should be in your dmat on the ex date. So have patience for the date to be announced.

Ans: Nippon India Tax Saver has not been a very consistent performer. It has done well considering a 3 year period, but on a 5 year basis and 1 year there are better performing funds in the ELSS segment like SBI LT Equity, HDFC Tax Saver and Kotak Tax Saver that you can choose from if you want to diversify.
If you are in the higher tax bracket, dividend may not be a good option due to the taxability of dividends.

Ans: yes, you will get bonus and split for dividend you need to claim it from IPF

Ans: Jitendra, it's great to see that you're thinking long-term with your investments. Midcap ETFs, like the Midcap 150, offer a unique growth opportunity, especially over a decade. However, let’s carefully evaluate this strategy in detail.

Potential of Midcap Stocks
Higher Growth Potential: Midcap companies often grow faster than large-cap companies. They have room to expand, and over the next 10 years, they can potentially outperform larger companies.

Risk Factor: With midcap stocks, the volatility is higher compared to large-cap. While they can offer better returns, the risk is also higher. There could be phases of market corrections or economic slowdowns that may impact midcap stocks more than large-cap ones.

Actively Managed Funds Over ETFs
While you’re considering a Midcap ETF, actively managed funds might be a better option for the following reasons:

Flexibility: Actively managed funds can adjust portfolios based on market trends. Fund managers can shift between sectors, reducing risks or capitalizing on opportunities, something ETFs cannot do.

Avoiding Underperformance: ETFs, like the Midcap 150, track an index. They can’t outperform it, so if the midcap segment underperforms, your returns will be lower. In contrast, actively managed funds can outperform the market in both upturns and downturns.

Disadvantages of ETFs Compared to Actively Managed Funds
No Active Decision-Making: ETFs don’t allow for active decision-making by fund managers. If there’s a market downturn, an ETF will continue to hold all its stocks, even if some are underperforming. In actively managed funds, a fund manager can sell or buy based on market conditions.

Limited Customization: With ETFs, you can’t customize the portfolio. If certain stocks or sectors are not performing, you’re still stuck with them.

Potential Tax Implications: If you decide to exit the ETF in a few years, you should consider tax on gains. Equity funds attract LTCG at 12.5% for gains above Rs 1.25 lakh, while STCG is taxed at 20%.

Your Current Portfolio and Midcap Strategy
Since you’ve already invested in strong large-cap companies like TCS and Infosys, your portfolio has a solid foundation. These are blue-chip stocks with a stable growth potential, which gives your portfolio strength.

To balance this:

Diversification is Key: It’s important to have a mix of large-cap and midcap stocks for a balanced risk-reward ratio. By adding midcap exposure through a fund or ETF, you diversify across different market segments, which can help balance your overall risk.

Avoid Over-Concentration: Since TCS and Infosys are large-cap stocks, and you’re now considering midcap investments, ensure that your portfolio doesn’t become over-concentrated in any particular sector.

Final Insights
Your long-term goal of holding midcap investments for 10 years can pay off, but consider the higher risks involved. While ETFs offer simplicity, actively managed funds provide flexibility, which can be critical in volatile markets. Since you’re already invested in strong large-cap stocks, adding midcap exposure can balance your portfolio. Ensure you diversify well to avoid over-concentration in any sector.

It’s always good to align your investment decisions with your risk tolerance and long-term goals.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Ans: ? Difference Between ETF and Mutual Fund

– ETFs track index without active management.
– Mutual Funds are managed by expert fund managers.
– ETF returns follow index ups and downs.
– Mutual funds aim to beat the index.
– ETFs require demat and trading account.
– Mutual funds are easy to invest via SIP.
– ETFs lack advisory support.
– Mutual funds offer handholding through Certified Financial Planner.
– ETFs suit market-savvy investors.
– Mutual funds suit long-term goal-based investors.

? Disadvantages of ETFs

– No SIP in traditional way.
– Need stock market timing for buy/sell.
– Liquidity issues if low traded volume.
– No emotional guidance in tough market.
– Only passive growth, no goal planning.

? Disadvantages of Index Investing

– Index funds follow market blindly.
– No downside protection during crash.
– Can’t change stocks even if poor performers.
– High volatility in small or mid cap indices.
– Not ideal for serious long-term goals.

? Why Actively Managed Mutual Funds Are Better

– Fund manager handles volatility.
– Can change stock selection based on conditions.
– Gives better performance in sideways or falling markets.
– Good for SIP with financial planning.
– Suits goal-focused investment like education or retirement.

? Summary Answer to Last Follow-Up Question

Mutual Fund via Regular Plan is better than Nippon ETF for long-term wealth creation.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment