What is ETF

 

What is ETF

Exchange-traded fund

ETF is termed as Exchange traded fund are one of the most important and valuable products created for individuals’ investors in recent years. ETF provides many benefits and, if used in a right way, are an excellent vehicle to achieve an investor’s goal.

There are some main attributes linked with the ETF are tax efficiency and low management costs. To start trading with ETF you need a trading/demat account with a broker for keeping the ETF unites.

If you do not have account and you wish to open, visit following links-

To open your account with Zerodha


To open your account with Angel Broking


To open your account with Alice Blue


Why invest in ETF?

If you are looking for an affordable investment, ETF will provide you an efficient way to access a broad range of asset classes. Here we have mention some of the features of ETF.


Features of ETF

1. Transparency- Investors will get to know about portfolio like what they are buying or selling.
2. Tax Efficiency- ETF provide excellent tax profit than mutual funds.
3. Professional Management- It can be managed by the professional investors.
4. Low fees- There is no need to pay additional charges on annual fees. It has lower annual fees as comparison to mutual funds.
5. Diversification- ETF provide u a diversify portfolio which helps investors to grow their portfolio.
6. Trading Flexibility- ETF allow investors to sell them anytime just like regular stocks. It provides higher flexibility than mutual funds.


Types of ETF

There are different types of ETF available we have mentioned below.
1. Equity Funds- ETF which are traded on the National Stock Exchange (NSE) like any other company stock and can be bought and sold continuously at the market price.

2. Fixed-Income Funds- Most of the professional investors recommend to invest a fixed portion of income in fixed income securities such as bonds and bonds ETFs.

3. Commodity Funds- ETF which are traded in physical commodities such as agricultural goods, natural resources, and metals.

4. Currency Bonds- This provides investors a strategic exposure in the currency market through a currency portfolio. Currency pairing will give investors the fluctuations in the exchange rates.

Also Read: What are Cyclical Stocks

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