How ETFs Add Value to Your Portfolio
17 Nov 2022
An ETF (exchange-traded fund) is a fund that is listed on the stock exchange. It can invest in equities, bonds, gold, currencies among other assets.
How ETFs work
Lets take an example of NIFTY 100 Index ETF. The ETF will mirror the Nifty 100 index by investing across the 100 companies in the index in the same allocation.
The ETF value fluctuates in line with the index value.
Core features of ETFs
- Cost effective - expense ratios of the ETF are much lower than active funds
- REAL TIME PURCHASE- you can make the most of market inefficiencies by buying intra-day instead of waiting for end of day NAV
- Transparency - ETF costs, buy / sell quotes, portfolios are public knowledge
- Passive strategy - ETFs follow a passive strategy wherein it replicates an index and its value changes as per the movement of the underlying index.
- Do ETFs merit a place in your portfolio?
ETFs have a role to play for the
- Wide range of choices across assets (equity, debt, g old, real estate)
- Availability of variety of ETFs like index ETFs smart beta ETF international ETFs Gold ETFs
- Convenience in devising an entire / part portfolio of diversified assets
Popular Infographics
Tag Clouds
Related Infographics
-
Disclaimer
The contents of this article/infographic/picture/video are meant solely for information purposes and do not necessarily reflect the views of Bank of Baroda. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Bank of Baroda and/ or its Affiliates and its subsidiaries make no representation as to the accuracy; completeness or reliability of any information contained herein or otherwise provided and hereby disclaim any liability with regard to the same. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Bank of Baroda or its affiliates to any licensing or registration requirements. Bank of Baroda shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.
Leave a Comment
Thanks for submitting your details.