Tata Ethical Fund vs Nippon India Shariah BeES (2026): Active Fund or ETF?

Tata Ethical Fund and Nippon India ETF Nifty 50 Shariah BeES are the two most-visited halal products on this site, and the choice between them comes down to four published facts. Tata Ethical's direct plan costs 0.61% a year (as on 31 August 2026), takes SIPs from ₹100 with no demat account, charges 0.50% if you exit within 90 days, and is actively managed against the Nifty 500 Shariah TRI. Shariah BeES costs 0.96% (September 2026 factsheet), needs a demat account and a minimum of one unit on NSE, has no exit load, and passively tracks the 18-stock Nifty50 Shariah index. Neither fund names a certifying Shariah board on its page, and Nippon states in writing that the ETF does no purification. The halal investing hub has the wider menu; this page settles the two-way decision.

The head-to-head from the scheme pages

Every number in the table is taken from tatamutualfund.com or mf.nipponindiaim.com on 16 September 2026. The Nippon expense figure carries a caveat the factsheet itself prints: since SEBI's 2026 reporting change, the headline number is a base expense ratio that excludes transaction costs and taxes, which are listed separately in the fund's annexure. Tata's page simply states an expense ratio; check its TER annexure if you want the all-in figure.

What each one actually holds

Tata Ethical's page lists its five largest holdings as on 31 August 2026: Infosys 7.25%, Tata Consultancy Services 5.76%, Tech Mahindra 3.73%, HCL Technologies 3.17% and Dr Reddy's Laboratories 2.96%, with sector weights of information technology 28.05%, healthcare 14.99%, fast moving consumer goods 10.32%, automobiles and auto components 9.94% and chemicals 6.71%. Because its benchmark is the 500-stock Shariah index, the manager can hold mid and small caps the Nifty50 Shariah never touches, and the fund's top position is about half the size of the ETF's.

Shariah BeES held 17 stocks on 31 August 2026, the whole Nifty50 Shariah index at that date, with Infosys at 17.09%, TCS 10.53%, Sun Pharma 9.03%, Hindustan Unilever 7.50%, Hindalco 6.32%, HCL Technologies 5.94%, UltraTech Cement 5.82%, Asian Paints 5.16%, Nestle India 4.61% and Tech Mahindra 4.44%. It is a large-cap-only basket by construction. Our halal stocks list for India prints the current constituents and the 30 September factsheet weights, which already differ from the ETF's August portfolio by one name.

Overlap: why holding both may not diversify you

All five of Tata Ethical's largest holdings are Nifty50 Shariah constituents and therefore sit inside Shariah BeES too. The IT block (Infosys, TCS, HCL Technologies, Tech Mahindra) is 19.91% of Tata Ethical and 37.99% of the ETF. If you hold both funds in equal amounts, your IT exposure is about 29% and your largest single stock is Infosys at roughly 12%. That is not two bets; it is one bet at two fee levels. The case for owning both is only that Tata reaches down the market-cap ladder where the ETF cannot, which argues for a deliberate split rather than an accidental one.

The performance gap shows the same thing from the other side. Nippon's page gives the ETF's three-year return at 2.47% against 3.60% for its benchmark and 8.99% for the Nifty 50 TRI to 31 August 2026; Tata's page gives the fund 6.15% over three years against 9.05% for the Nifty 500 Shariah TRI. Both trail their Shariah benchmarks, both trail the Nifty 50, and the reason is the sector tilt that any halal Indian equity portfolio carries. The concentration problem in Indian halal portfolios covers the sizing question.

Certification and purification: what the documents say

Neither page names a certifying body. Tata's page says the scheme will adhere to the investment restrictions stipulated under Shariah principles, which are reviewed periodically by the Shariah boards, without naming them, and lists what the fund will not do: no preference shares, options, futures, derivatives or conventional money market instruments, no borrowing against assets, no short selling. Nippon goes further in the other direction. Its product note states that the ETF does not represent itself to be a Shariah compliant scheme, has not appointed a Shariah board, and does not follow any Shariah dividend purification process; the screening it describes belongs to the index and its partner TASIS.

For purification that means the same thing in both cases: you do it. The index methodology states that investors are required to purge the pro rata portion of interest income accrued on their holdings, and neither fund page describes a process that does this for you. Our dividend purification guide explains how to estimate the impure share for a fund where you cannot see every holding every day. The full Tata Ethical Fund review and the Shariah BeES review go into each document in more depth.

Costs over ten years on ₹10,000 a month

Expense ratios sound small until they compound. The difference between 0.61% and 0.96% is 0.35% a year on the running balance. On a SIP of ₹10,000 a month for ten years, that is ₹12 lakh of contributions, and the extra 0.35% on a balance that averages several lakh over the period is tens of thousands of rupees; the exact figure depends on returns, so run both numbers through a SIP calculator before you decide. Set against that, the ETF charges nothing on exit and nothing on entry beyond brokerage, while Tata takes 0.50% if you redeem within 90 days, which only matters if you plan to trade it.

• Tata Ethical direct: 0.61% a year, 0.50% exit load inside 90 days, no brokerage, no demat charges
• Shariah BeES: 0.96% a year, no exit load, broker charges on each buy and sell, demat annual maintenance if your broker charges it
• Both: no entry load, both taxed as equity-oriented schemes, both leave purification to the investor
• Neither: a named certifying Shariah board on the scheme page we fetched

The Taurus Ethical alternative

Taurus Mutual Fund's Taurus Ethical Fund is the third active option and the one that prints its Shariah ratios in the scheme information document, which neither Tata nor Nippon does on the pages we fetched. Its weakness is a certification gap we document in the dedicated review. If transparency about the screen matters more to you than fund size, read that review before defaulting to Tata; if track record and asset base matter more, Tata's 30 years and ₹3,647 crore are the larger facts.

Tax treatment in one sentence

Both are equity-oriented schemes under Indian tax law, so gains and dividends are taxed under the same equity rules and the choice between them is not a tax decision; the current rates and holding periods are on incometaxindia.gov.in and change with each Finance Act, so check them there rather than here. Nippon's page notes that since 1 April 2020 fund dividends are taxed in the investor's hands with tax withheld by the scheme, which applies to both.

Who should choose which

Choose Tata Ethical if you are a monthly SIP saver without a demat account, want to start at ₹100 or ₹500, prefer a manager who can own mid caps and trim IT, and will hold for years so the 90-day exit load never applies. Our halal SIP guide gives the mechanics of a direct-plan SIP. Choose Shariah BeES if you already have a demat account, invest in lump sums, want exactly the index with no manager judgement in between, and value a nil exit load and intraday pricing; accept the higher expense ratio and the large-cap-only basket as the price. Use the compare tool when you want a third product in the frame.

Do not hold both by accident. If you want both, decide the split for a reason, such as Tata for mid-cap reach and the ETF for the large-cap core, and remember that their top five names are the same. Facts checked against tatamutualfund.com, mf.nipponindiaim.com, niftyindices.com on 16 September 2026.

Frequently asked questions

Which is cheaper, Tata Ethical Fund or Shariah BeES?

Tata Ethical's direct plan, at 0.61% as on 31 August 2026, against 0.96% for Shariah BeES in the September 2026 factsheet. The ETF adds brokerage on each trade and demat charges but has no exit load, while Tata charges 0.50% on redemptions within 90 days. For a long-term holder the ETF is the more expensive product, which is unusual, and reflects its small size of ₹59.65 crore.

Can I start a SIP in Shariah BeES?

Only through a broker that offers ETF SIPs, and then in whole units at the market price, which was ₹425.44 a unit on 16 September 2026. Nippon's minimum is one unit through the exchange. Tata Ethical accepts a direct-plan SIP from ₹100 a month with no demat account, which is why it is the simpler choice for small monthly savers.

Is Shariah BeES Shariah certified?

No. Nippon India's product note states that the ETF does not represent itself as a Shariah compliant scheme, has not appointed a Shariah board, and does not follow a dividend purification process. What it does is replicate the Nifty50 Shariah index, which NSE Indices screens monthly with TASIS. The compliance belongs to the index; the fund is a passive wrapper around it.

Is Tata Ethical Fund Shariah certified?

The fund page refers to restrictions under Shariah principles reviewed periodically by the Shariah boards, without naming a certifier, and lists its exclusions: no options, futures, derivatives, preference shares, borrowing or short selling. Our full review covers what the scheme information document says beyond the page. Treat it as a Shariah-mandated fund whose certification you should verify in the SID rather than assume.

Do Tata Ethical and Shariah BeES hold the same stocks?

Largely, at the top. Tata's five largest holdings (Infosys, TCS, Tech Mahindra, HCL Technologies, Dr Reddy's) are all Nifty50 Shariah constituents held by the ETF. Tata's benchmark is the 500-stock Shariah index, so below the top names it owns mid and small caps the ETF cannot. Holding both doubles your IT and large-cap exposure unless you size the split deliberately.

Which has performed better?

To 31 August 2026, Tata Ethical's direct plan returned 6.15% a year over three years and 7.46% over five, against 2.47% and 0.67% for Shariah BeES, per each fund's own page. Both trailed their Shariah benchmarks and the Nifty 50 TRI over those periods. Past returns are not a forecast, and the gap partly reflects Tata's mid-cap reach in years when mid caps did well.