Exchange Traded Funds are essentially Index Funds that are listed and traded on exchanges like stocks. Until the development of ETFs, this was not possible before. Globally, ETFs have opened a whole new panorama of investment opportunities to Retail as well as Institutional Money Managers. They enable investors to gain broad exposure to entire stock markets in different Countries and specific sectors with relative ease, on a real-time basis and at a lower cost than many other forms of investing.
An ETF is a basket of stocks that reflects the composition of an Index, like S&P CNX Nifty or BSE Sensex. The ETFs trading value is based on the net asset value of the underlying stocks that it represents. Think of it as a Mutual Fund that you can buy and sell in real-time at a price that changes throughout the day.
Benefits of ETFs?
ETFs offer several advantages to investors: -
1. Can easily be bought / sold like any other stock on the exchange through terminals across the country.
2. Can be bought / sold anytime during market hours at a price close to the actual NAV of the Scheme.
3. No separate form filling. Just a phone call to your broker or a click on the net.
4. Ability to put limit orders.
5. Minimum investment is one unit.
6. Enjoy flexibility of a stock and diversification of index fund.
7. Expense Ratio is lower.
8. Provides arbitrage between Futures and Cash Market.
An ETF is a basket of stocks that reflects the composition of an Index, like S&P CNX Nifty or BSE Sensex. The ETFs trading value is based on the net asset value of the underlying stocks that it represents. Think of it as a Mutual Fund that you can buy and sell in real-time at a price that changes throughout the day.
Benefits of ETFs?
ETFs offer several advantages to investors: -
1. Can easily be bought / sold like any other stock on the exchange through terminals across the country.
2. Can be bought / sold anytime during market hours at a price close to the actual NAV of the Scheme.
3. No separate form filling. Just a phone call to your broker or a click on the net.
4. Ability to put limit orders.
5. Minimum investment is one unit.
6. Enjoy flexibility of a stock and diversification of index fund.
7. Expense Ratio is lower.
8. Provides arbitrage between Futures and Cash Market.
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