What is Exchange Traded Fund (ETF)?

ETF

What is Exchange Traded Fund (ETF)?
What is Exchange Traded Fund (ETF)?

An exchange traded fund,or ETF, is a cluster of different securities merged together in a single fund that is traded on the stock exchange. Most ETFs track a benchmark or an index and try to replicate its performance, making it easier for an investor to buy or sell their shares of an ETF through a broker. ETFs trade at the stock exchange much like the price of other stocks.

Objective of ETF

The objective of an ETF is to offer an array of investment strategies at low cost and is not limited to stocks. An investor can invest in bonds, commodities, derivatives or a mix of securities therefore providing diversification to build a customised investment portfolio according to financial goals at low cost than most of the other offerings.

As it is known for its diversification and can be traded on the stock exchange, ETFs ensure swift trading options based on market views and rapid development in global events.

ETFs allow minimal investment that can help beginner investors to invest with a small investment.

Difference between ETF and Mutual Fund?

  • Due to their similar characteristics, both represent a basket of securities or bonds, an ETF or Mutual Fund can be taken for being the same but offers different features. Most notable is that an ETF, similar to stocks, can be traded throughout the trading day soon after the exchange opens while a Mutual Fund can be bought or sold only after the market closes for the day.
  • Further, an ETF can be more tax efficient as an investor has to pay taxes only when they sell their shares whereas, in a Mutual Fund, the investor has to pay tax as long as they have holdings. Most ETFs are also index-based that translates to lower turnover than active funds leading to fewer chances of facing capital gains distributions.
  • An ETF incurs a lower fee as it is passively managed by a manager compared to a Mutual Fund, which has to be actively managed, thus the fee increases.

Latest Updates on ETF

Bitcoin slips back toward $40,000 mark as ETF excitement simmers down

2 min read Last Updated :Jan 22 2024 | 7:14 PM IST
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Crypto emerges from the shadows

4 min read Last Updated :Jan 12 2024 | 10:37 PM IST
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Crypto wrap: High volatility in market after SEC's approval of Bitcoin ETFs

2 min read Last Updated :Jan 12 2024 | 3:44 PM IST
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Bitcoin at 21-month-high as US SEC approves Bitcoin ETF from heavyweights

4 min read Last Updated :Jan 11 2024 | 10:25 PM IST
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Bitcoin surpasses $45,000 for 1st time in 2 yrs on ETF approval hope

2 min read Last Updated :Jan 02 2024 | 7:48 PM IST
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Crypto wrap: Bitcoin gains on Argentina's endorsement, ETF anticipation

2 min read Last Updated :Dec 22 2023 | 5:01 PM IST
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Crypto wrap: US Fed's commentary on rate cuts in 2024 keeps market volatile

3 min read Last Updated :Dec 15 2023 | 5:04 PM IST
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Investment by EPFO in ETFs crosses Rs 2.5 trillion: Rameswar Teli to LS

2 min read Last Updated :Dec 11 2023 | 8:15 PM IST
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At $35,198, Bitcoin climbs to highest since May 2022 on ETF excitement

2 min read Last Updated :Oct 24 2023 | 10:56 AM IST
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Govt exempts investment trusts, ETFs from capital gains tax in GIFT City

2 min read Last Updated :Sep 13 2023 | 10:59 PM IST
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Some active funds made hefty bets on Jio Financial amid ETF selling

2 min read Last Updated :Sep 12 2023 | 10:26 PM IST
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First Bharat Bond ETF matures, delivers 6.5% annualised returns

2 min read Last Updated :Apr 20 2023 | 10:42 PM IST
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Share sale overhang on YES Bank as three-year lock-in nears end for lender

3 min read Last Updated :Mar 07 2023 | 10:22 PM IST
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Sebi allows two more avenues to hike public float at listed companies

2 min read Last Updated :Feb 03 2023 | 9:58 PM IST
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Hindenburg report on Adani group: Index provider MSCI invites feedback

3 min read Last Updated :Jan 28 2023 | 1:34 PM IST
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$115 billion thematic ETF boom unhindered despite mounting losses

4 min read Last Updated :Dec 10 2022 | 10:20 PM IST
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Govt to launch 4th tranche of Bharat Bond ETF from Fri, to mature in Apr

2 min read Last Updated :Dec 01 2022 | 11:20 PM IST
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Cathie Wood's ARKK on the verge of taking out its Covid-19 low

3 min read Last Updated :Oct 11 2022 | 10:54 PM IST
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Equity inflows at 10-month low in Aug, exchange traded funds gain traction

1 min read Last Updated :Sep 09 2022 | 2:28 PM IST
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Adani Enterprises' inclusion in Nifty50 index divides D-Street

4 min read Last Updated :Sep 02 2022 | 11:02 PM IST
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