Make a healthy life with wealthy management through concept of exchange traded fund.
What is difference between mutual fund and exchange traded fund ?
Mutual fund can be purchased at the end of each trading day, while exchange traded fund can be traded like stocks. It is the main difference.
Keep mutual fund investment aside today will more focus on exchange traded fund.
Build portfolio with help of exchange traded fund .....
Merits of ETFs.....
A) Provide more trading flexibility one can buy ETFs like we buy stock in short frequent trade can be done.
B) Marketable security
Exchange traded fund tracks an index, commodity, bonds or basket of asset. One can easily liquidate with market rate.
C) Gold ETFs
Invest in gold, even buying and keep at safe make people tedious task experience but through this Avenue one can easily avail gold like owning a stock even can do trade on exchange like BSE and nse
D) It is good for long term?
Yes, index based ETFs are good option to invest for long term. It gives absolute return to the investor when index goes vertically up may be artificially rally.
Advantages of ETFs.....
A) Less due diligence
It doesn't require much analysis due to diversification and impact of ETFs price will be less rather to individual stock
B) cheaper to mutual fund
It has very nominal fees compare to mutual fund expenses due to simple structure and easy to trade and maintainance.
C) No rule of particular amount
One can start investment with 1000 rs. Or even one unit of any ETFs fund. While even there is no banned for maximum limit also. So, every one can easily participate in this fund.
D) Diversification speed
Money will float to various sector and stocks. It may be basket of 10/20/50 stocks also. So, reduce the risk due to diversification.
E) can easy to buy insurance/ hedging
Due to index ETFs one can buy put option to cover risk of unfavourable movement of market. Many experience investors frequently take insurance during uncertain market condition.
11 Reason to add ETFs to your portfolio.....
1) Better Diversification
It provide wide range of diversify industry access by adding one etfs only, while being a average investor buy only specific stock or industry which involve bit risk component compare to buying ETFs.
2) Performance of portfolio
Due to buying specific stock it is said to hold etfs improve performance of portfolio as a whole. Even professional money manager at times find market hard to perform so individual can't perform well.
3) Easier to track
Due to more number of stock it is hard to track each individual while buy index based Etfs or index fund representing a core position of 10-20-50 stocks, resulting in a portfolio less complex and easier.
4). Easy to average or replace
One can easily buy more etf when an investor wants to take more exposure in equity or easy to exit one etf and replace with other pool of stock
5) lower taxes and activity
Due to buying basket of stock through etfs generate lower trading activity and outlook changers of individual stock. With more trading activity, more capital gains realized and create higher tax attract while Etfs provide larger diversification of portfolio in a single roof so net plus minus of individual entry set off against each other. At last outcome of fewer capital gains will be generated.
6) Decreased volatility
Due to single roof of etfs volatility might not be seen much rather than holding all individual stocks in portfolio. Etfs itself is diversified and less price movement.
Example: if you hold shares of pharma in portfolio I.e. sun pharma sudden fall of 16% in a days represent big negative return on portfolios but if you hold pharma etfs effect might be very less.
7) cost of transaction lower
Due to simple structure of Etfs and fewer trade and commission only annual management fees and broker commission is to pay.
8) focus portfolio
Many times investor doesn't want to buy particular stock or sector but for diversification purpose one must to add in core portfolio. Example: if being an investor I don't want to buy public sector bank but sudden changes and huge package given to public bank might take stock to wonderful rate. Last time sbin moved 35% in single day completely unexpected move.
9) Formal approach to portfolio
Due to such strategies, risk, insurance, control and hedging strategies with tax plan become easier to implement with sophistication approach.
10) Develop skill of investing
Due to proper implement of strategy require certain degree of knowledge of commerce field which includes market risk, indexes, sectors, forex risk, and moreover experience of applying strategy.
11) Easy to harvest loss
Investor can harvest loss easily to carry forward and take benefit of tax.
List of exchange traded fund in India.....
https://en.m.wikipedia.org/wiki/List_of_Indian_exchange-traded_funds
Thanks
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