The investment objective of ETFs is to provide investment returns closely corresponding to the total returns of the securities as represented by the index that it tracks.
Stock market investment comes with its own share of volatility and the returns may not follow a linear path. For those who want to invest for the long term and are already investing through mutual funds, here’s another variant called exchange traded funds (ETF) that could be looked at.
Unlike mutual funds, the ETF units are traded on the stock exchange during trading hours. So, one can buy and sell ETF units the way one buys stocks anytime when the exchanges are open. Anyone with a demat account with any brokerage house can trade in ETF’s.
An ETF, typically, tracks one specific index and thus investing in it means you end up buying all the stocks of the index in the same proportion as held in the index.
While selecting ETFs, the volume of units traded that represents liquidity is an important factor to look at. Also, the market price of the ETF may be different and could be higher or lower than the NAV.
While the volatility in stock prices may continue, for someone accumulating funds for a long term, there is no need to time the market. ETF’s helps in accumulation units on lower prices on days when the market shows high volatility.
Here are 11 ETFs across market capitalization and sectors that are generally traded with high volumes:
The ETF that will help you buy the Nifty 50 is the NIPPON India NIFTY BeES ETF, which is the oldest, largest and comes with enough liquidity and thus can be considered to be a part of your long-term portfolio. There are other Nifty 50 ETFs also available from various fund houses.
Some other ETFs are:
Linked to Nifty Next 50 index
Linked to Nifty Midcap 150 index
Linked to Nifty Midcap 100 index
Linked to Nifty 100 index
Linked to Nifty Bank index
Linked to Nifty IT index
Linked to CPSE ETF index
Linked to NIFTY Pharma Index
Linked to Nifty Auto Index
Linked to Nifty Consumption index
The investment objective of these and any other ETFs is to provide investment returns closely corresponding to the total returns of the securities as represented by the index that it tracks, subject to tracking errors. One may consider building a portfolio by diversifying in two or more such ETFs by spreading investment across market capitalisation and sectors.