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Opt for exchange-traded funds with low-impact cost, say analysts

To avoid the challenge of buying ETFs at the right price, choose index funds


One issue such investors could face is that there may not be an index fund for every ETF available, although this option should be available in the major categories

Sanjay Kumar Singh Mumbai
Highlighting the issue of low liquidity in exchange-traded funds (ETFs), the Securities and Exchange Board of India (Sebi) Chairman Ajay Tyagi said recently that the regulator will examine ways to deal with this problem. Until the regulator acts, investors must tackle this issue themselves.

How low liquidity can hurt  

While a large number of ETFs has been launched, only a small percentage is liquid. Investors who enter into one without checking its liquidity risk burning their fingers. Suppose the net asset value (NAV) of an ETF is Rs 100. When you try to buy it, you get a price of Rs 102.

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First Published: Jul 28 2021 | 6:05 AM IST

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