5 things investors must know about exchange traded funds

1. An ETF is a basket of securities like a mutual fund that often tracks an underlying index like Nifty or S&P BSE Sensex.

2. Unlike other mutual funds, ETFs are traded like individual stocks on an exchange at real time price during trading hours.

3. In India, we have 3 types of ETFs: Equity ETF, Debt ETF and Gold ETF.

4. Costs associated with ETFs are brokerage of the transaction, STT and the expense ratio of the ETF.

5. ETF is an efficient, low cost way of investing in a diversified portfolio.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)

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