Imagine the ability to hold a Mutual Fund that you could buy and sell during trading hours with the benefit of real-time trade prices like stocks. That’s precisely what Exchange traded funds or ETFs are, a combination of stocks and Mutual Fund schemes. The underlying portfolio of an ETF is an index, it is constructed to track the index and thus mimic the market. Consider it much like holding an index fund such as Nifty 50 with the ability to trade it in the market. Now wouldn’t that be interesting!
Globally ETF’s have been well adopted by investors. It has enabled them to gain exposure to global stock markets across geographies and sectors on a real time basis and at lower costs as compared to other investment instruments. Post the various crisis affecting markets in the past, investors across developed nations have realised that in investing one must take control of what they can control. As investors, we cannot control gains and returns but can control costs. One of the benefits of investing in ETF is that they are low on costs. The expense ratio for an ETF in India is as low as 0.05% which is way lower when compared with mutual funds.
Number of ETFs in the U.S. 2003-2019
The trend for ETFs grew post the 2008 crisis where over the next decade ETF assets grew from $700 billion in 2008 to $5 trillion in 2019. Indian investors are yet to ride the wave of ETF investments. The adoption trend in developing economies have been slow, this could be attributed to the lack of variety of ETFs in India. Today, there are approximately 80 odd ETFs available for trade in India, while US has approximately 2,096 ETFs and there are approximately 6,970 ETFs floating in global markets. In India the trend is yet to set in and there is scope for growth and acceptance around ETFs as a valuable instrument both from a long-term as well as short-term perspective. We have a few varieties such as index ETF, gold ETF, sectoral ETF and international ETF.
Considering the idiom ‘Don’t Put All Your Eggs in One Basket’, ETFs work best; it keeps your investments diversified and costs low resulting in better gains. For investors who are keen on timing the market for better gains, ETFs give you that freedom and much needed liquidity to trade in real-time.
Benchmark Mutual Fund was the first company to launch the first ETF in India in 2001. There is much scope in exploring ETFs as valuable investments and hence to better decipher the ETF market both domestic, as well as global and to understand the concepts and strategies that drive ETFs, who better to explain it than the pioneers themselves. In conversation with, Mr. Sameer Desai and Mr.Hemen Bhatia who have played a vital role in developing and launching various innovative ETFs that float in the Indian market today; we intend to explore the world of ETFs.
Join us as we consult these financial experts and discuss ETFs, the apt strategies, factors that facilitate its growth, and if ETFs are value buys.
Topic – ETF: An Investment Worth Exploring.
Date – Friday, 28th August 2020
Time -5:00PM (IST)
If you missed this webinar, click here for in-depth details about our discussion and insights gained.