ETFs or exchange traded funds are similar to index mutual funds. However, they trade just like stocks.
ETFs were started in 2001 in India. They comprise a portfolio of equity, bonds and trade close to its net asset value. These funds mainly track an index, a commodity, or a pool of assets. They have the following advantages over mutual funds and equity/debt funds:
Lower Costs: An investor who buys an ETF doesn’t have to pay an advisory/management fee to the fund manager and taxes are relatively lower in ETFs.
Lower Holding Costs: As commodity ETFs are widely traded in, there isn’t any physical delivery of commodity. The investor is just provided with an ETF certificate, similar to a stock certificate.
Exchange traded funds