Indian investors are starting to choose ETFs, sometimes known as Exchange Traded Funds, more and more. Simple, reasonably priced track indexes like Nifty, Sensex, or even gold abound. Understanding well-known ETFs will enable you to make better decisions whether you are new to investing or wish to diversify your portfolio.
This is a basic overview of some of the most often used ETFs in India, fit for beginners.
What is an ETF?
Allow us to define an ETF before diving into the list:
An ETF is a basket of securities—such as bonds or stocks—likewise. It is sold on the stock market much as a standard share. You could buy or sell it any moment during market hours. Most ETFs monitor a sector or market index.
Advantages of ETFs Investing
- Low cost: Comparatively to mutual funds, the expense ratio is rather low.
- Diverse: One ETF exposes you to plenty of stocks.
- Simple trading: Buy and sell as though you were a stockholder.
- Open: You consistently know what the ETF owns.
- Good for long-term wealth creation.
Let us now review the most often used ETFs among Indian investors nowadays.
Most Popular ETFs in India
- Nippon Japan Nifty BeES
- Follows the Nifty 50 index.
- Good for novices.
- Long performance history and high liquidity.
- Follows the Nifty 50 index.
- SBI ETF with Nifty 50
- Another choice in line with Nifty 50.
- Under control by SBI Mutual Fund.
- Minimal tracking error and low cost.
- Another choice in line with Nifty 50.
- ICICI Prudential Nifty Next 50 ETF
- Tracks the Nifty Next 50 index.
- Covers businesses most likely to join Nifty 50.
- Somewhat higher growth potential but more risk as well.
- Tracks the Nifty Next 50 index.
- HDFC Sensex ETF
- Follows BSE Sensex.
- Makes investments in top thirty companies.
- Simple and steady.
- Follows BSE Sensex.
- Kotak Banking ETF
- Only concerned with the banking industry.
- Tracks the Nifty Bank index.
- Great if you think Indian banks will grow.
- Only concerned with the banking industry.
- Nippon India Gold BeES
- Tracks actual gold prices.
- Safe choice during fluctuating market conditions.
- Facilitates portfolio diversification.
- Tracks actual gold prices.
- Motilal Oswal Nasdaq 100 ETF
- Exposes US tech stocks.
- Includes companies like Apple, Microsoft, Amazon, etc.
- Perfect for global diversification.
- Exposes US tech stocks.
Items to Review Before Making ETF Investments
- Tracking mistakes: Lower is better.
- Expense ratio: Affects your returns.
- Liquidity: Higher liquidity makes buying and selling simpler.
- Underlying index: Find out what the ETF monitors.
ETF Investors: Who Should They Be?
- First-time traders seeking simplicity.
- Individuals reluctant to choose specific stocks.
- Long-term investors seeking reasonably priced solutions.
- Those seeking global markets or gold exposure.
Passive investing is much aided by ETFs. Selecting from the well-known ETFs helps you begin to lay a strong basis for your financial future.