ETF

When you first look at an ETF, the price on the exchange can feel like the only number that matters. Then you notice another figure, the NAV, and the two may not always match. That difference is normal. It does not mean something is wrong with the fund. It simply means one price is coming from live trading, while the other is based on the value of the underlying holdings after they are measured and counted. Once you understand that split, ETF investing becomes much easier to read.

Since times immemorial, gold has enjoyed a special status in Indian culture. It is not just treated as a precious metal but also an auspicious keepsake. Over the centuries, the way to invest in gold has evolved––be it traditional forms of physical gold like coins and ornaments to modern financial options like gold ETFs and sovereign gold bonds. In recent times, digital gold has emerged as a popular avenue among Indian investors.

Exchange Traded Funds (ETFs) are financial products which provide direct investment exposure to benchmark indices and commodities. As per the SEBI Guidelines, an ETF must deploy at least 95% of its assets in securities of the underlying index.  ETFs undertake passive investing, and the fund managers replicate the underlying index and implement changes in the investment portfolio as and when the changes happen in the index constitution.

Exchange Traded Funds (ETFs) are passive investment options that offer direct investment exposure to underlying indices or commodities like silver, gold etc. As per SEBI Guidelines, an ETF must deploy at least 95% of its assets in securities of the underlying index.

Fund managers are mandated to track the specified index and implement changes in the investment portfolio as and when the changes happen in the index constitution. They cannot go beyond the index composition or their respective weights.

Advantages of Exchange Traded Funds

Mutual funds have been steadily emerging as an attractive investment option for retail investors and have become one of the intelligent avenues to invest money. This is because it's convenient to invest in mutual funds, and there are many schemes to choose from.

Across different mutual fund schemes, the investment portfolio may be managed actively or passively. While active investing requires making active investment decisions by the fund managers, passive investing tracks benchmark indices instead of fund managers making independent investment decisions.

One may consider active and passive investment products when one plans to invest in financial markets. Active investment products are those where the investment portfolio is being managed actively, with the professional fund management team taking investment decisions after research and due diligence. The objective of an actively managed scheme is to generate alpha, i.e. returns over and above market benchmarks.

Debt funds are mutual funds that invest in money market and debt securities to generate returns for the investors. These funds may invest in the securities/ bonds issued by sovereign entities, banks, corporates, Public Sector Undertakings (PSUs), etc. depending upon the specific categories of debt funds' investment objective. Debt funds can be broadly classified into duration funds, money market funds, gilt funds, and credit opportunities funds. 

What is gold ETF?

A gold Exchange Traded Fund (ETF) is an investment option that tracks domestic gold prices. A single gold ETF fund unit will be equal to 1 gram of gold.

A diversified investment portfolio holds the key to long term financial prosperity. The investors must plan to allocate their investments across different asset classes such as equity, debt, gold, etc. Since the investors don't rely on a single asset class for their portfolio performance, the returns may be expected to be stable across market cycles. While equity renders the potential of higher returns over the long term, the debt investments may impart with stability to the portfolio. 

What is an ETF?

ETF stands for Exchange Traded Fund. As the name suggests, ETFs can be traded on stock exchanges, just like other stocks listed on stock exchanges.

As per the SEBI Guidelines, ETFs must invest at least 95% of their net assets in the underlying index's securities. Thus, ETFs adopt passive investment strategies tracking different indices, viz., equity, debt, or commodities.