How to invest in NSE 20 index funds in 2024

Find out how to invest in the NSE 20 index, learn which trading platforms have the lowest fees, and what’s easiest for beginners.
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Updated: May 12, 2023
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It only takes a few minutes to invest in the NSE 20 index. One of the simplest and most popular ways to invest is to buy shares in a Vanguard NSE 20 ETF through an online trading platform.

Where can I invest in the NSE 20 index?

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According to our expert research, IG Markets is the best ETF broker to invest in NSE 20 index funds. 

Both NSE 20 ETFs and NSE 20 CFDs are available to invest in through IG Markets .

Here are three more places to buy the NSE 20, ranked according to their cost, security, and features.

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1
Min. Deposit
100 €
Best offer
User Score
10
Handel in +2000 CFD's op aandelen, opties, grondstoffen en meer
Onbeperkte risicovrije demo-account
0 commissies & aantrekkelijke spreads
Start Trading
Payment Methods:
Bank Transfer, Debit Card, PayPal, Credit Card, Visa, Mastercard, American Express, Trustly, Apple Pay, Google Pay, Discover, Bank Transfer: SEPA, Bank Transfer: FPS, skrill
Full Regulations:
ASIC, FCA, FSA, MAS, CySEC #250/14

Buy or sell stock CFDs with Plus500. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

2
Min. Deposit
100 €
Best offer
User Score
10
Start Trading
Payment Methods:
Apple Pay, Google Pay
Full Regulations:

71% of retail CFD accounts lose money.

3
Min. Deposit
85 €
Best offer
User Score
9.9
Open een MT5-account om lang of kort te gaan op 250 van de grootste Amerikaanse, Australische en Europese aandelen
Instrumenten in 21 tijdframes en 80 vooraf geïnstalleerde indicatoren
Verordening multi-jurisdictie door ASIC en VFSC
Start Trading
Payment Methods:
PayPal, neteller, Credit Card, Wire Transfer, Cryptocurrencies, skrill
Full Regulations:
ASIC, CySEC, FCA
74-89% of retail CFD accounts lose money

How do I invest in the NSE 20 index?

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The easiest way is to sign up to a stock broker, open an investment account, and buy shares in an NSE 20 ETF or CFD. This guide explains how to do it:

Step 1. Sign up to IG Markets

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We recommend using IG Markets to invest in NSE 20. Sign up for a brokerage account and deposit some money. You may need to supply a form of photo ID to verify the account.

1
Min. Deposit
40 €
Best offer
User Score
9.9
Offre spéciale limitée – 0% de commission et 0% de droits de timbre sur TOUS les stocks!
Plateforme primée – achetez des actifs physiques ou négociez avec effet de levier
Plus de 11 méthodes de paiement, dont PayPal
Start Trading
Payment Methods:
Bank Transfer, Debit Card, neteller, Credit Card, Wire Transfer, Sofort, Visa, Mastercard, American Express, Klarna, POLi, Przelewy24, Rapid Transfer, Trustly, Apple Pay, Google Pay, Discover, Maestro Master, Electron, Bank Transfer: SEPA, iDeal, Checkout, eToro Money, Payabl, Przelewy 24, ZotaPay, Worldpay, skrill
Full Regulations:
ASIC, CySEC, FCA

eToro offers real assets only, no CFD products. eToro securities trading offered by eToro USA Securities, Inc. (‘the BD”), member of FINRA and SIPC. Investing involves risk, and content is provided for educational purposes only, does not imply a recommendation, and is not a guarantee of future performance. Invezz.com is not an affiliate and may be compensated if you access certain products or services offered by the BD.

Step 2. Decide how to buy NSE 20

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This boils down to choosing between an NSE 20 ETF or CFD. ETFs are generally better suited to investors who want to passively track the NSE 20’s performance. CFDs offer a greater range of trading options: you can use leverage, short the index, or buy and sell it outside of trading hours.

Step 3. Invest in the NSE 20

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Sign into your trading account and search for the NSE 20. Hit the ‘buy’ button and enter the details of your purchase, such as how much you want to spend. Hit ‘buy’ again to execute the trade.

Step 4. Monitor your investment

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When you buy a CFD, the trade goes through more or less instantly, and you’ll be able to see your new open position in your trading account. ETF purchases can take longer, and if you buy outside of traditional trading hours it won’t go through until the next morning.

Your trading account will show the price change in the NSE 20 since you bought it, so you can see your profit/loss at a glance. Use that information, along with your own research, to decide when to sell the NSE 20 and close your position, ideally at a profit!

The different ways to invest in the NSE 20

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As we mentioned above, there are numerous ways to put your money into the NSE 20. ETFs and CFDs are the simplest options for beginners, but there are alternatives. Here’s a brief overview of each option and who it’s best suited for.

NSE 20 ETFs

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An ETF (exchange-traded fund) is an investment fund traded on a stock exchange, much like a stock. Exchange traded funds can hold different assets, such as individual stocks, bonds, or commodities, or serve as a proxy for a stock market index.

An NSE 20 ETF is one way of investing in the NSE 20. It’s simply an investment fund that mirrors the performance of the NSE 20. When you buy shares in the fund, the value of your investment will rise or fall with the NSE 20 itself. 

ETFs are ideal for new investors because they have a very low minimum investment. You can start with a few pounds and get exposure to some of the world’s largest companies. They’re also practical if you plan on trading the NSE 20 index, because you can buy or sell shares in the fund throughout the day.

NSE 20 index funds

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An index or mutual fund is an investment fund that aims to track the performance of a stock market index, such as the NSE 20. It’s very similar to an ETF, in that there are low management fees and you can buy shares through your online broker.

However, there are a couple of differences. NSE 20 index funds are only priced at the end of each trading day, so you can buy or sell shares in the fund once per day. There may also be a higher barrier to entry, through a much larger minimum investment when you invest in NSE 20 index funds.

That means an NSE 20 mutual fund is better suited for long term investors with a higher initial budget, where the infrequent trading and barriers to entry are far less of an issue.

NSE 20 CFDs

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CFDs (contracts for difference) are a way to speculate on NSE 20 price changes with more flexibility than if you use an ETF or index fund. A CFD is a ‘derivative’, which means it gets its value from the underlying asset – in this case the NSE 20 – but it’s separate from it.

As a result, CFDs can be leveraged, where you borrow money to multiply the size of the trade, or they can be used to go ‘short’, where you place a trade on the index to fall in value. You can also buy and sell them outside of regular trading hours.

All of this means NSE 20 CFDs offer the potential to outperform a fund that passively tracks the NSE 20’s performance. Of course, you can also underperform it as well. Tools like leverage and shorting introduce a lot more risk, and are best left to experienced traders.

NSE 20 futures

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Futures contracts are agreements to buy or sell the NSE 20 at an agreed price on a set date in the future. NSE 20 futures are a means to predict how you think the index is going to perform over a set time frame, such as the next three or six months.

Most futures contracts involve leverage, so you only put up a small part of the total trade value (the margin) when you buy one. That makes futures more risky, and they require a bit more financial expertise to understand as well.

Some traders use futures as a hedge against the performance of stocks they own. For instance, if you own stocks that are part of the NSE 20 then you might want to short the NSE 20 so that you still make some money if the price falls.

NSE 20 stocks

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Another way to invest in the NSE 20 is to buy shares in the individual stocks that the index tracks. It isn’t practical to buy every share in the index, but you can invest directly into a few of the most heavily weighted stocks in the NSE 20 in order to get broad exposure to its performance.

The most heavily weighted stocks in the NSE 20 tend to be the largest companies by market capitalisation. If you invest directly in those largest stocks, you gain exposure to the index without taking on the risk of all the underlying companies.

One reason to do this is that these larger companies with the highest market cap dominate the index anyway, so that it can give you the impression of a diversified portfolio while actually being reliant on the performance of those particular stocks.

For the NSE 20 index, the largest stocks you might choose to invest in are:

Company name
Saini Ltd
Nation Media Group
WPP Scangroup Ltd
Kenya Commercial Bank
Athi River Mining
Diamond Trust Bank Ltd
Equity Bank Ltd
CFC Stanbic Holdings Ltd
East African Breweries Ltd
British American Tobacco Kenya Ltd

The flip side of investing directly like this is that you lose the diversification and stability that comes with buying into an entire index. It requires much more hands-on management to do your own stock picking, so it’s best suited to more experienced investors.

How much does it cost to invest in the NSE 20 index?

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From $0 to $5, depending on how you invest. For each option, you must consider the cost of buying the actual asset, whether that’s an ETF, index fund, CFD, or share, plus the fees associated with it.

InstrumentTrading feeManagement fee
InstrumentTrading feeManagement fee
Exchange traded funds$0-$5.990-0.2%
Index fund / mutual fund$0-$5.990.1-2%
Individual stock$0-$3None
CFD$0None

*A fee comparison of 3 leading brokers for example purposes

ETFs and CFDs are generally the cheapest option overall, as they have low fees and a low minimum investment. Index funds and mutual funds have low fees but may have a high minimum investment. Buying individual stocks is the most expensive option in absolute terms, because the share price of a single large company is often more than $100.

All options are likely to include a trading fee, which you pay each time you make a transaction. Some trading platforms offer zero-fee trading, with others it may be a few dollars. 

Then ETFs and index funds each have their own expense ratio. Expense ratios refer to an annual management fee, charged as a percentage of your total investment. Expense ratios are usually no more than 0.05%, so if you invest $1,000, you would pay $5 per year in management fees.

Should I invest in the NSE 20 index? 

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Yes, NSE 20 investing is a great choice if you’re looking for a safer investment with more price stability compared to picking individual stocks. It gives you an instantly diverse portfolio with exposure to a broad area of the stock market.

The flip side is that you have less control over which companies you invest in. An index committee decides how the index works, and you can’t pick and choose the underlying companies you like the most. The NSE 20 is better suited to hands-off investors, compared to those who have the skills, experience, and desire to pick their own stocks.

What are the advantages of investing in the NSE 20 index?

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An index provides instant stock market diversification, where you spread your risk across a large number of underlying companies, rather than one or two. Here are some more reasons why you might want to invest in the NSE 20 index:

  • Access to a diversified portfolio of stocks. The NSE 20 includes large and stable companies across different industries. The diversification protects you, as the performance of the others can make up for one or two stocks falling in value.
  • Less expensive than buying shares one by one. You can normally invest in a Nairobi Stock Exchange ETF for a few pounds, which gets you a piece of all the companies on the index. Compare this to paying a few pounds per share for each individual stock, and it can add up to a big saving.
  • Get exposure to lots of different industries. The NSE 20 includes banks, mining companies, media organisations, and many other types of business. This helps with the diversification, as each industry may react differently to the economic environment and the variety ensures a relatively stable overall performance.
  • A simple way to invest in the Kenyan stock market. All the stocks on the NSE 20 operate in Kenya. There are strict requirements about how much of the business must be based in Kenya, so it’s a way to invest in the economy as a whole rather than banking on the performance of certain companies.
  • Less time commitment compared to picking your own stocks. It’s much easier to pick an index and invest in it, rather than spending a long time researching which stocks to buy. That makes indices ideal for beginners, who may not yet have the expertise to pick stocks for themselves.

What are the disadvantages of investing in the NSE 20 index?

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The main risk of investing in the NSE 20 is that all the underlying companies are related in some way, so a broader economic downturn that affected the entire country would likely affect many stocks in the index at the same time. Here are some more risks of NSE 20 investing.

  • The NSE 20 is a small index, which can lead to higher volatility. There are only 20 stocks on the index, which is a lot less than on major indices like the FTSE 100. Fewer stocks often means more volatility, because each company has a greater influence on the overall index performance.
  • The index’s performance is closely linked to the Kenyan economy. Any issue that affects the Kenyan economy as a whole is likely to affect all the stocks on the index at the same time, removing some of the benefits of diversification. 
  • It’s difficult to find ETFs or funds that invest in the NSE 20. As the NSE 20 is a small index based in an emerging market, you may not be able to invest in it very easily from the US or Europe. 
Invest in the NSE 20
Should I invest in the NSE 20 through an index fund or ETF?
How should a beginner invest in the NSE 20?
Can I invest in the NSE 20 from the UK?
Does the NSE 20 pay dividends?


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Risk disclaimer
James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.