What are ETFs?
ETFs or exchange traded funds are passively managed funds that replicate an index such as BSE Sensex, CNX Nifty, etc. They usually hold all the stocks in the same weight as done by the index they are replicating. As they are passively managed funds, they don’t have a fund manager.
Fees associated with ETFs are pretty low since they don’t need active management. As an investor, you can invest in them through either SIPs or a lump sum.
How to invest in ETFs with us?
Investing in ETFs with us, SBICAP Securities Ltd., is a simple and hassle-free process. All you need to do is to login with your client ID and PAN number. Then, click on the NFO tab, and once the ETF is listed on the exchange, you can buy or sell it through your Demat account.
As the name suggests, an Index ETF is specifically designed to replicate a particular index such as Nifty 50, BSE Sensex and CNX Nifty, among others.
As it replicates an index and buys shares that proportionately reflect the securities of the index, the price fluctuation in the index is reflected in the ETF.
Gold ETFs combine the features of gold investment and stock trade. In general, they are open-ended mutual fund schemes that give you exposure to the gold market. If you are looking to beat inflation in the long run, you can opt for Gold ETFs.
Note that one gold ETF is equal to one gram of gold. Investing in Gold ETFs is a good way to diversify portfolio with exposure to the gold market. Gold ETFs are highly liquid, which means you can easily convert them into cash when required.