What is an ETF? Is it better than mutual funds? | Telugu News

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What Is An Etf Is It Better Than Mutual Funds

 

Isn't the happiness different when a hard earned rupee brings another rupee.. Is there anything better than that in the form of interest coming together in fixed deposits? Financial experts say ETF. It explains that ETFs have better returns than FDs.

People's interest towards fixed deposits (FD) in post offices and banks is gradually decreasing. Banking sector experts say that the main reason for this is that investors have other options for better returns. Investments in stock market and mutual funds are increasing for better returns. But apart from this, ETF can be a good tool to earn better returns on investment. ETFs have been making huge gains over the years. Let's know about ETF in more detail.

What is an ETF?
Simply put, an ETF is an investment option. Investments are made in the stock market through Exchange Traded Funds (ETF). Some stocks are invested through ETFs. It usually tracks a specific index.

Like stocks, ETFs are also bought and sold on stock exchanges. An ETF can be sold at any time during the trading period. Interest in ETFs is increasing among retail investors. This is because of its huge returns. Some ETFs have returned as much as 100 percent over the course of a year.

ETFs are used to invest in commodities and bonds. Amphy clarified that ETFs are funds that track indices like CNX Nifty or BSE Sensex. Every ETF also has fund managers. As a result, the investor does not need to buy or sell shares.

Why are ETFs better than mutual funds?

* ETFs can also be bought and sold in the same way as shares are bought and sold.
* One can keep an eye on ETF while trading in stock market. Investments are more transparent in this.
* ETF can be easily sold by way of selling stocks.
* ETFs can be used to invest in various sectors.
* Dividends from ETFs are not subject to income tax.
* ETFs have lower expense ratios than mutual funds.
* Investors are not required to pay any exit load on withdrawal of ETF.

Investors can choose ETFs based on their risk appetite.
1. Bond ETF: Investing in Bond ETF provides investors with monthly income. This category may include government, corporate and municipal bonds.

2. Stock-based ETF: A stock-based ETF consists of different types of stocks that provide returns to investors depending on their performance.

3. Sector Based ETF: An industry or sector is a fund that tracks the performance of a specific industry. For example, a company operating in the energy sector is included in an ETF related to that sector. There are options for ETFs like IT, PSU, CPSE. Along with these, ETFs belonging to the IT sector are also available.

4. Commodity Based ETF: Gold ETF is popular among investors. Commodity ETFs invest in commodities such as crude oil or gold. Large investors keep a portion of gold ETFs in their portfolio.

5. Currency based ETF: Currency ETF is an investment that tracks the rise and fall of the country's currency. There are many uses for currency ETFs. A country can use political and economic trends to predict the value of its currency.

6. Inverse ETF: An inverse ETF is designed to profit from stock drops by shorting equities. Selling the share price when you think it will go down and then buying it at a lower price can generate returns.

 

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