Exchange Traded Funds (ETFs)

About ETFs: 

An exchange-traded fund (ETF) is a collection of marketable securities that track an underlying index. ETFs combine features of mutual funds and stocks, allowing investors to gain exposure to a basket of assets while providing the flexibility to be traded on stock exchanges like individual stocks.

• Diversification: ETFs provide diversification by allowing investors to gain exposure to a basket of assets with a single investment.
• ETFs can be bought and sold throughout the trading day on stock exchanges at market prices, unlike mutual funds which are priced only at the end of the trading day.
• Affordable: ETFs typically have lower fees and expenses compared to actively managed mutual funds, as they are passively managed to track an index.
• The largest ETFs track major stock market indexes like the S&P 500, providing investors with broad exposure to the overall stock market.

Types of ETFs:

• Equity ETFs that track equity indices.
• Debt ETFs that invest in government and corporate bonds.
• Commodity ETFs that invest in commodities like gold and silver.
• Sectoral/thematic ETFs that focus on specific industries or themes.

International ETFs that track foreign indices.

Q1: What are mutual funds and stocks?

Mutual funds are investments in a portfolio of securities, managed by professionals, offering diversification and reduced risk. Stocks are direct investments in individual companies, requiring expertise and risk tolerance.

Source: Investors pour into India ETFs ahead of election result