ICICI Prudential Mutual Fund has launched an exchange-traded fund (ETF) based on the S&P BSE 500 index on Wednesday. The interesting point about this is that it allows to simplify your equity investments to the extreme. Invest in it and you get exposure to a substantial portion of the market. It is a good product for beginners. It’s advisable for them to invest in a passive fund first, and get accustomed to the volatility of equities, before graduating to an active fund.
Should you invest in it?
Not so fast. Ensure that the expense ratio is low. You also need to check its tracking error, or how closely the fund is able to track the index. For that, give it some time to develop a track record. Also ensure that there are sufficient trading volumes in this ETF.
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