- Exchange Traded Funds -
Investors new to stock selection can diversify their investments into stocks, bonds, gold with Exchange Traded Funds. ETFs are traded on exchanges and their value is based on the value of its underlying stocks. It insulates investors from short-term market fluctuations.
We can consider an ETF as a basket that holds several securities that tracks one or more underlying assets. By nature, it is close to mutual funds, but listed with the exchanges and traded in the market like stocks. It is an index fund that follows a benchmark index irrespective of market movement.
An ETF is like a portfolio, containing different types of investments – stocks, commodities, bonds, and more, to create a well-balanced basket.
ETF funds are highly liquid, and prices of these funds move with the market trends. This allows investors to buy or sell them any time during trading hours.
ETF funds were introduced in India in 2001. The first ETF was NIFTY BEES.