ETF-Exchange Traded Fund
ETF is a basket of securities,
which are traded on an exchange. ETFs are available throughout the day in Indian Market for trading during market hours.
ETF mainly tacks indexes price of NSE-NIFTY/BSE-SENSEX by allocating same weights
as the Nifty/Sensex. To buy ETF one need to open DEMATS account.
TYPES OF ETF
Passive equity
ETFs are designed to replicate the performance of followed
stock market benchmarks such as the BSE100, NIFTY50.
Active equity
ETFs Active ETFs may offer the potential to outperform a
market benchmark but may also carry more risk and higher costs.
Fixed-income
ETFs focus on only bonds. Have relatively low return and
generally safe portfolios.
Gold ETFs ETFs typically hold physical
gold as the underlying asset. It gives low returns and very popular.
Gold ETF Comparison Vs NIFTY 50
In the above
chart we can see Gold ETF has given 83.19 % where as NIFTY50 has given 23.20%
over the periods of 5 year, Gold ETF has out-performed against NIFTY. Mainly
the Gold and Nifty have been moved opposite from starting Jan-2020 due to COVID
-19.
If somebody
investing on Physical gold, it will be better to investment some portion in
Gold ETF for long terms 5/10/20 year period to get better return.
So everybody should allocate some portion of investment in ETFs as it is safe as compared to equity/derivative products.
NOTE: All the above information are for only knowledge and my view only , before taking any investment decision please consult your financial consultant.
Book- How the Stock Market Works: A Beginner's Guide to Investment
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