Portfolio construction and…
Benefits of ETFs
Diversification
ETFs offer exposure to a diverse range of shares spreading risk and adding to portfolio stability.
Liquidity
Traded on stock exchanges, ETFs provide easy buying and selling, ensuring quick and efficient transactions.
Low costs
With generally lower fees than traditional mutual funds, ETFs offer a cost-effective investment option.
Transparency
ETFs disclose their holdings monthly, providing investors with clear visibility into the underlying shares.
Frequently Asked Questions
ETFs and index funds both track market indices, but the main difference is that ETFs trade like stocks on stock exchanges, offering flexibility and intra-day trading. Unlike index funds, you need a demat account to invest in an ETF.
There are several types of ETFs in India. These include broad market ETFs that track major indices like Nifty 50, gold ETFs, which track the prices of domestic gold, bond ETFs, which invest in government or corporate bonds, sector ETFs, which focus on specific sectors such as banking or technology and commodity ETFs, which track commodities like silver and other metals.
ETFs passively track indices and trade like stocks on exchanges, allowing intraday trading and typically having lower fees. In comparison, actively managed mutual funds invest in securities that are selected by fund managers who seek to outperform the market in the long term. This can lead to higher expense ratios. Moreover, mutual funds are not traded on the stock exchange and units can only be bought and sold at the end of a business day.
The Net Asset Value (NAV) of an ETF is calculated at the close of each trading day. It represents the value of the ETF’s holdings, minus any liabilities, divided by the total number of outstanding units. In addition to the daily NAV, ETFs also provide an indicative NAV or iNAV throughout the trading day, based on real-time market movements.
The market price of an ETF is determined by supply and demand throughout the trading day. The net asset value (NAV), representing the total value of the underlying shares, is calculated at the end of each trading day.
Investors can hold ETFs for the long term. There's no predefined maturity date, and ETFs can be part of a buy-and-hold.
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Product Label
- Bajaj Finserv Nifty 50 ETF (An open ended exchange traded fund tracking Nifty 50 Index)
- Bajaj Finserv Nifty Bank ETF (An open ended exchange traded fund tracking Nifty Bank Index)
Disclaimer
This document should not be treated as endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.