An ETF is a collection of securities that are traded on the stock exchange. These securities could be stocks, commodities, bonds or currencies. As they are listed on an exchange, ETFs trade like stocks and experience price changes as and when they are bought and sold. Assume a fund that has all the Sensex 30 stocks. Let’s call it the Sensex Fund. This fund, with its basket of 30 stocks, gives you the advantage of risk diversification. Trading in an ETF is just like buying or selling the Sensex Fund or any other Index Fund listed on the stock exchange. Since the Sensex Fund trades like a stock, its price fluctuates during market hours.
You can earn from your idle money with ETFs. They have the potential to beat long term returns from Savings Accounts and Fixed Deposits. Here’s how they compare:
Annual Returns (as on July 5 2023)
In 3 years, investment of Rs. 100,000 would become
Rs. 109,273 (Assuming 3%)
Rs. 119,102 (Assuming 6%)
No management costs
No management costs
Expense ratio of < 0.20%^ + Brokerage of < 0.40%
Allowed without any penalty
Penalty on premature withdrawal
Allowed without exit load^. Only cost is Brokerage
|Savings Account||Fixed Deposits||Nifty 50|
|Annual Returns (as on July 5 2023)||3-6%||6-7.5%||12.22%|
|In 3 years, investment of Rs. 100,000 would become||Rs. 109,273 (Assuming 3%)||Rs. 119,102 (Assuming 6%)||Rs. 1,41,298|
|Investment Cost||No management costs||No management costs||Expense ratio of < 0.20%^ + Brokerage of < 0.40%|
|Early Withdrawal||Allowed without any penalty||Penalty on premature withdrawal||Allowed without exit load^. Only cost is Brokerage|
^ For ETF based in index such as NIFTY
^^ Assuming return of 3% (Savings A/C), 6% (FD), 15.73% (Nifty 50). Taxation not considered.
** Basis Kotak Securities current delivery brokerage rate
Let the numbers speak for themselves! Here are the top 3 NIFTY-benchmarked ETFs *** with regular 3 year returns:
The 3-year benchmark return for the ETFs above is 15.73%
** Past performance is not indicative of future results.
Securities mentioned are exemplary and not recommendatory
Pre-tax rate of return
Liquid ETFs with their 1-year return
DSP Liquid ETF - 5.62%*#
ICICI Prudential Liquid ETF - 5.35%*#
Nippon India ETF Liquid BeES - 4.46%*#
Nifty 50: Allowed without exit load^. Only cost is Brokerage ^ For ETF based on index such as NIFTY ^^ Assuming return of 3% (Savings A/C), 6% (FD), 12.22% (Nifty 50). Taxation not considered. ** Basis Kotak Securities current delivery brokerage rate
What Does Kotak Securities Offer? At Kotak Securities, we offer you access to trade in gold, index, sector-specific as well as international Exchange-Traded Funds. Here’s how you can invest:
0 people liked this article.