Exchange-Traded Funds (ETFs)

An ETF (Exchange Traded Fund) is an investment fund that trades on stock exchanges just like shares of a company. Instead of investing in a single stock or bond, an ETF pools money from many investors and invests in a basket of securities — such as stocks, bonds, commodities, or even gold.

ETFs are designed to track the performance of a specific index, sector, commodity, or theme, giving you diversification in a single trade.

Key Features of ETFs

1. Traded Like Stocks
   • You can buy and sell ETFs in real-time during market hours.
   • Prices move throughout the day, just like any listed stock.
2. Diversification Made Easy
   • A single ETF gives exposure to multiple securities.
   • Example: A Nifty 50 ETF mirrors the performance of the Nifty 50 index by holding its 50 constituent stocks.
3. Flexibility Across Asset Classes
   • ETFs cover a wide range of categories:
     • Equity ETFs (Nifty, Bank Nifty, sector-based)
     • Debt ETFs (government securities, corporate bonds)
     • Commodity ETFs (gold, silver)
     • Thematic ETFs (technology, energy, etc.)
4. Lower Costs
   • ETFs usually have lower expense ratios compared to actively managed mutual funds since they are passive products.

Why Traders and Investors Use ETFs

• Liquidity: Easy to buy/sell during market hours.
• Transparency: Holdings are disclosed daily.
• Diversification: Reduces stock-specific risk by spreading across multiple securities.
• Flexibility: Can be used for short-term trading, long-term investing, or even hedging.

ETFs have their own advantages and disadvantages. They are low-cost, transparent, and give instant diversification with stock-like flexibility — but watch out for tracking errors, low liquidity in some ETFs, and no direct SIP option.

Curated ETFs & Browsing

Go to the drop down menu in the market watch to explore themed collections (e.g., Nifty 50, sectoral, international). Filter by popularity, returns, AUM, or risk. Each ETF page shows fund objectives, holdings, and performance.

Buying or Selling ETFs

Select the ETF, input quantity or amount, choose market or limit order, and place the trade. Track orders in the Orders section.

Expense Ratio & Tracking Error

• Expense Ratio: Annual fund management fee.
• Tracking Error: Performance gap between ETF and its benchmark index. These metrics help evaluate cost-efficiency and accuracy.