1.What Are ETFs?
ETF’s are essentially the same as Mutual Funds but they trade like individual stocks. The price of a mutual fund scheme is determined by its Net Asset Value (NAV) at the end of a trading day. The price of an ETF fluctuates throughout the trading day as they are traded during the trading hours on a stock exchange.
2.Benefits Of Investing In An ETF
Flexibility to trade: ETFs can be traded throughout the day on the stock exchange like individual stocks and hence provide liquidity to the customers.
Lower Costs: ETFs are listed on the stock exchange and generally have a less expense ratio than most mutual funds
Simple structure: ETFs are simple in structure and easy to understand.
Tax Efficiency: ETFs generally generate relatively low capital gains, because they typically have low turnover of their portfolio securities.
Diversification Investments in ETFs are widely diversified as indices are construed to represent performance of the stock market as a whole.
3.Which Is The Right ETF For Me?
There are several criteria that one should look at while choosing the right ETF for their portfolio. Some of them are: Cost: Expense ratios can vary greatly even among ETFs tracking the same market. Everything else being equal, choose the ETF with the lower expense ratio, because costs directly affect your returns.
Benchmark When choosing an ETF, first decide on the market, market segment, or industry sector you wish to track, and then decide on the appropriate index for that market. Each index provider has its own construction methodology, resulting in wide variations in turnover and other portfolio characteristics. Benchmarks tracking the same market segment can deliver very different results.
Management team: Index funds are not created equal. Effective, efficient portfolio management skills can make a difference, often offsetting marginal differences in costs between two indexed products. Review the experience and track record of the fund managers. Through Ez Wealth’s platform, you can buy/sell any of the 100+ available mutual fund schemes from more than 5 mutual fund houses.
4.How To Buy ETF’s?
If you have decided which ETF is right for you, you can choose to buy them just like you would buy an individual stock. To obtain the list of ETF’s please click here. Because ETFs trade like stocks, you will be charged a commission for each trade
Lump Sum Purchase
ETF – SIP is first-of-its-kind comprehensive facility that provides an opportunity to invest systematically and in a disciplined manner in specified ETFs (Exchange Traded Funds) ETF – SIP averages the cost of purchase and help accumulate wealth over a long period of time.