All You Want To Know About ETFs

Exchange-traded funds (ETFs) are an important vehicle in the passive investment category in India. According to data from the Association of Mutual Funds in India (AMFI), the Indian mutual fund industry has 11 gold and 141 other ETFs, with a little over Rs.5 lakh crore of assets under management (AUM) across 16.3 million folios as of October 2022. ETFs primarily represent a particular theme or index. For instance, the Nifty 50 ETF will only track and emulate the performance of the Nifty 50 index. Likewise, a banking ETF will only track the banking theme, and hence, its portfolio will only have banking stocks. So, the basic investment structure in an ETF and an actively-managed mutual fund is the same. That said, there are major differences between the two. For instance, a Nifty 50 ETF and a Nifty 50 benchmarked fund will have, more or less, the same portfolio, but the weightage and...