Arun Sundaresan says that while expense ratio is important, investors should not overlook liquidity and impact cost, as they can significantly affect ETF returns. Higher volumes and liquidity result in lower impact cost. When considering portfolio placement, investors can choose from various types of ETFs, such as market cap based, sectoral, thematic, and niche strategies. The ETF market in India is growing rapidly and is expected to reach a significantly larger size in the future.
Resolve not to be pushed into making a decision. Anything that is positioned as ‘do it now, or it will go away must be viewed with caution. Good quality investment returns are boring and happen over time. Buying businesses and funds with track records of performance is always superior to trying something new.
What are mutual fund ETFs and how to invest in them?
SECTIONS
Last Updated: Apr 05, 2021, 06:30 AM IST
Share
Synopsis
ETFs typically track and replicate a particular market index just like index funds. It can be a stock market index such as a Nifty ETF or a commodity index such as a gold ETF or the bond market in the form of a Bond ETF. ETFs are launched by asset management companies just like other mutual fund schemes.
Getty Images
An exchange traded fund or ETF is a fund that is listed and traded on the stock exchange. It is available for purchase from the fund house during the New Fund Offer (NFO) period. Post the NFO, the units of the fund are listed on the stock exchange for purchase and sale.