What Are Exchange Traded Funds

Podcast Duration: 04:19
Angel One Podcast ke is episode me aapka swagat hai.

Stock market me trade karne ka matlab hai ke aapko bahut saare aise instruments aur investment avenues ke baare me sunne ko milega jinka naam bhi shayad aap pehli baar sun rahe hone. But you are not alone in this. Agar aap stock markets ko study karne ke newspaper ya website pe research karo you might come across the term ETFs. Don’t worry we are here to solve the mystery about what ETFs are.

ETFs is short for Exchange-traded funds. Isko samjhne ka best tareeka hai uske words ko break karke separately samjha jaye.

These are funds, so they are like mutual funds. But, they are ‘exchange-traded’ and that is what makes a difference. Ye vo funds hain jo stock exchange par listed hote hain aur trade kiye jaate hain. Isilye jab aap newspaper me stocks ki performance dekhne jaate hain, to wahan ETFs bhi listed hote hain. Process bhi kaafi similar hota hai: just like shares, they are also bought and sold during the trading hours on a stock market. ETFs kuch securities ka collection hote hain and these securities track an underlying index. These features make them different from mutual funds jahan investors apni money pool karke fund manager ko dedete hain. ETFs active funds nahi hote, toh mutual funds ki tarah aap fund manager ko ye nahi batate ke aapki risk appetite kitni hai aur uske hisaab se aap kya karna chahte ho. Instead, they copy an index they are studyng, aur phir wo uski performance ko replicate karne ki koshish karte hain.

Main jaanti hun ke aap soch rahe hai - toh ETFs k kyun prefer kiya jaaye? It still feels complicated. Well, there is a reason that individual and institutional investors both find ETFs useful. Ek , unka fund management charge bahut kam hota hai, and mutual fund manager ki fees ke comparison me toh kaafi kam. Second, ETFs ka trade open market me hota hai. Bilkul shares ki tarah they also have higher visibility in intraday prices.

Pehle ETFs sirf best-performing stocks ko track kiya karte the, but time ke saath they have evolved to track various asset classes and indices.

ETFs ke kayi aur benefits bhi hote hain Jaise ki diversification. ETFs ke through aapka sectoral exposure badh jaata hai. Investment portfolio ka balanced aur vivid hona bahut hi zaroori hai. Keeping that in mind, ETFs aapka risk spread kar ete hain, aur portfolio me variety bhi le aate hain.

Another benefit is in the form of liquidity. ETFs stock exchange par directly trade kiye jaate hai - theek shares ki tarah. So it goes without saying that they have a high liquidity. Aap ETF stocks ko market me buy aur sell kar sakte hain, just like ordinary shares. Because of the same reason, there is ease of trading in ETFs. you have to look at the stock market itself. So this ensures a high liquidity and convenience factor. This is a major plus point!

Rahi baat mutual funds se compare karne ki, toh ETFs ki expense ratio bhi mutual funds ki management fees se kam hoti hai.

In fact, ETFs me invest karne ke liye you don’t need huge amounts. Even one unit is enough!

So, now you know what ETFs are and you’re wondering if they are for you? Well, let me tell you ETFs kin sabhi ke liye suitable hote hain.

One, if you are a retail or wholesale investor aur aapka investment horizon long-term hai, then it makes sense to diversify with ETFs. The major bonus points for ETFs is the low cost. ETFs ke case me expenses include brokerage commission - which is usually a percentage of the value of the trade. And minor charges and costs of trading stocks like the difference in the ask-bid spread etc.

Two, if you are a Financial Institutional Investor, aapko bhi ETFs me fayda dikhega of easy asset allocation and hedging.

Agar aap short-term ke liye market me invest karna chahte hai, toh ETFs ki liquidity aapke kaam ayegi.

App investor spectrum pe kahin bhi khadein ho, you might find ETFs useful! If you now decide to explore them as an option, happy trading!