What are the benefits of investing in ETFs?
Curious about ETFs
There are several benefits of investing in ETFs (Exchange Traded Funds) for Indian investors, including:
1. Diversification: ETFs allow investors to gain exposure to a diversified basket of stocks or other securities with a single investment. This can help to reduce the risk of a concentrated portfolio.
2. Low Cost: ETFs typically have lower expense ratios compared to actively managed mutual funds, which can help to improve longterm returns.
3. Liquidity: ETFs trade on exchanges like stocks, which means they can be bought and sold throughout the trading day, providing investors with greater flexibility and liquidity.
4. Transparency: ETFs provide transparency to investors as the underlying holdings are publicly disclosed on a regular basis, which can help investors make informed investment decisions.
5. Tax Efficiency: ETFs are generally more tax efficient compared to mutual funds as they have a lower turnover of holdings, resulting in fewer capital gains distributions.
6. Easy Accessibility: ETFs are easily accessible to retail investors as they can be purchased through a brokerage account, which is available to anyone with a demat account.
Overall, ETFs offer Indian investors a costeffective and convenient way to gain exposure to a diversified basket of securities, while providing liquidity and transparency.