What are exchange-traded funds (ETFs)

1.ETFs are available for various asset classes like equity, debt and commodities.
2.These have lower expense ratios, but brokerage fees and other trading costs need to be incurred while buying or selling ETFs.
3.ETFs can be bought and sold throughout a trading day at the prevailing market price.
4.These funds aim to replicate the performance of an index, but slight deviations or tracking errors are likely.
5.Compared to mutual funds, the variety of ETFs available in India is relatively limited, restricting investor choice.


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