Invest in Exchange Traded Funds and own all stocks proportionately making up a particular benchmark index
Passive investment instruments which replicate the composition of underlying indices by investing in securities in a proportional manner.
Exposure to a basket of securities that, in this case, is a basket of bonds and other debt products.
Securities like Gold and Silver that provide investors with exposure to the price movements of commodities without physically owning them.
Understanding The Basics Of ETF Investing With Shradha Thakker
Kotak Securities
•06m 52s
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Feature | ETFs | Securities | Traditional Mutual Fund |
---|---|---|---|
Real-time trading and pricing during market hours | Yes | Yes | No |
Convenience of putting limit orders | Yes | Yes | No |
Ability to be traded real-time on the Stock Exchange | Yes | Yes | No |
Arbitrage between Futures and Cash Market | Yes | Yes | No |
Diversification possible with a single unit | Yes | No | Yes |
Returns in sync with the market/ benchmark index | Yes* | No | No |
Intra-day trading | Yes | Yes | No |
Exit Load | No | No | Yes |
*Returns are subject to Tracking Error
While ETFs have a low expense ratio, they do have some charges that are specific to them. Because ETFs, like stocks, are purchased as shares through a broker, an investor must pay a brokerage commission each time he or she makes a purchase. In addition, an investor may incur the standard fees of stock trading, such as disparities in the ask-bid spread and so on. Traditional mutual fund investors, on the other hand, are indirectly susceptible to the same trading charges because the fund pays for them.
ETFs have specific risks in spite of their diversification benefits. Generally, the risk associated with investing in ETFs are broadly classified into: