Exchange Traded Funds

What is an ETFs?

Exchange-traded funds, commonly known as ETFs, are a collection of various securities such as bonds, shares, money market instruments, etc., that often track an underlying asset. Simply put, ETFs are a mashup of different investment avenues. They offer the best attributes of two popular financial assets – mutual funds and stocks.

ETF funds are somewhat similar to mutual funds in terms of their structure, regulation, and management. Additionally, just like mutual funds, they are a pooled investment vehicle that offers diversified investment into various asset classes like stocks, commodities, bonds, currencies, options, or a blend of these. Moreover, they can even be traded like stocks on the stock exchanges.

Advantages of Exchange Traded Funds (ETFs):

• Easily Accessible- Tradable on exchange

• Cost-Effective- Low management fee, no front load/exit charges

• Instant Diversification- Fund structure/collective investment scheme

• Transparent- Underlying and portfolio details are published daily

• Secured- Regulated and governed under listing requirements

• Liquid- Availability of market maker