BSE Sensex Index is the benchmark index that tracks the performance of portfolio of 30 blue-chip companies. It includes 30 largest companies by market capitalization in the Bombay Stock Exchange. Sensex along with the Nifty 50, are the two leading market indices in India. They are considered to be the barometers of the entire stock market in India. Sensex ETFs are among the most popular exchange traded funds.
Sensex was launched in 1986 and has values from 1979. Sensex covers more 47% of the total market cap of all listed companies in BSE (as on 18th August 2021). The index represents 30 largest companies based on float adjusted market capitalisation. The weights of the index constituents are based on free float market capitalization. Free float market capitalization means the market cap of free floating shares, which are shares held by the public. Free float shares are shares which are not held by the promoters and their families, related parties, management of the company and the Government. In free float market capitalization based index, the companies with highest free float market cap will have higher weights in the index. The index is calculated on a real time basis and rebalanced semi-annually in June and December.
As on 18th August 2021
Source: Bombay Stock Exchange, Advisorkhoj Research, as on 18th August 2021
As on 18th August 2021 in INR lakh crores
Source: Bombay Stock Exchange, Advisorkhoj Research, as on 18th August 2021
The chart below shows the performance of Sensex Total Returns Index over the last 10 years (ending 25th August 2021). Over the past 10 years, Sensex TRI has given 10.29% CAGR returns outperforming both gold (6.6% CAGR) and bank Fixed Deposits (7.3% CAGR).
Source: Bombay Stock Exchange, Advisorkhoj Research. Period: 01.08.2011 to 30.07.2021. Disclaimer: Past Performance may or may not be sustained in the future.
Exchange Traded Funds (ETFs) are relatively one of the best ways to invest in market indices. ETFs do not aim to beat the index but merely replicate their performance – reduce tracking errors. Since ETFs are passively managed, their cost is relatively lower than that of an actively traded mutual fund scheme. Lower cost will generally result in higher returns for the same level of performance.
Investors should consult with their financial advisors if Sensex ETFs are suitable for their investment needs
Suggested reading:
https://www.advisorkhoj.com/nimf/all-that-you-wanted-to-know-about-nifty-it-etf
Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.
The information being provided under this section 'Investor Education' is for the sole purpose of creating awareness about Mutual Funds and for their understanding, in general. The views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. Before making any investments, the readers are advised to seek independent professional advice, verify the contents in order to arrive at an informed investment decision.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.