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Exchange Traded Funds (ETF)
- Average returns - Dynamic
- Number of funds - (Static)
What are
Exchange Traded funds?
An Exchange Traded Fund (ETF) is a mutual fund scheme which is listed and traded on the stock exchange. Its portfolio tracks an index, a collection of stocks, bonds or a commodity.
Advantages of Exchange Traded Funds
Passive investment
Usually ETFs track a particular index or a commodity, they do not rely on fund managers’ expertise for generating returns.
Versatile
There are different types of Exchange Traded Funds available in the market allowing you to choose onle that matches your needs.
Cost-effective
Being passively managed, ETFs have low expense ratios. This converts to higher NAVs which can deliver higher returns over the investment tenure.
Types Of Debt Funds
AUM: 23427(Cr)
Risk: Very High
- MIN. INVESTMENT 500
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹10000
- Get (30 Yrs) ₹24,850*
*Projections/estimations is backtested using historical data.
- AUM: 23427(Cr)
- Risk: High
- MIN. INVESTMENT 1000
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹15000
- Get (30 Yrs) ₹34,850*
*Projections/estimations is backtested using historical data.
- AUM: 23427(Cr)
- Risk: Very High
- MIN. INVESTMENT 500
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹10000
- Get (30 Yrs) ₹24,850*
*Projections/estimations is backtested using historical data.
- AUM: 23427(Cr)
- Risk: High
- MIN. INVESTMENT 1000
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹15000
- Get (30 Yrs) ₹34,850*
*Projections/estimations is backtested using historical data.
- AUM: 23427(Cr)
- Risk: Very High
- MIN. INVESTMENT 500
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹10000
- Get (30 Yrs) ₹24,850*
*Projections/estimations is backtested using historical data.
- AUM: 23427(Cr)
- Risk: High
- MIN. INVESTMENT 1000
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹15000
- Get (30 Yrs) ₹34,850*
*Projections/estimations is backtested using historical data.
- AUM: 23427(Cr)
- Risk: Very High
- MIN. INVESTMENT 500
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹10000
- Get (30 Yrs) ₹24,850*
*Projections/estimations is backtested using historical data.
- AUM: 23427(Cr)
- Risk: High
- MIN. INVESTMENT 1000
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹15000
- Get (30 Yrs) ₹34,850*
*Projections/estimations is backtested using historical data.
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Mr. Mohammad Moosa Azmi
Aditya Birla Home Finance
1 Jan 1
My trading experience with ABM has been very fruitful. I have always been receiving excellent support from my dealer. Moreover, the transparent business practices at ABM makes it the preferred broker in the industry.
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Aditya Birla Sun Life Insurance Customer
1 Jan 1
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Aditya Birla Health Insurance Customer
1 Jan 1
Due to seamless branch support and timely communication from ABSLI, my maturity payout process was quite smooth.
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Aditya Birla Sun Life Insurance Customer
Haryana
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Aditya Birla Sun Life Pension Management Customer
1 Jan 1
The digital platform and whatsapp service of ABHFL gives me a quick access to my basic loan details such as statement of accounts, loan account details, interest certificate, and repayment schedule.
Mr. Arpit Jain
Aditya Birla Housing Finance Customer
Gurgaon
Understanding Debt Funds
Table of Contents
What are Exchange Traded Funds?
Different from other mutual funds, Exchange Traded Funds are schemes which are traded on the stock market. They invest in an underlying index or a commodity and help you earn returns equal to the benchmark index or commodity. You will need a trading/ demat account to buy or sell ETFs.
What are the features of Exchange Traded Funds?
-
Prices fluctuate constantly as ETFs are traded on the stock market
-
Different types of ETFs for different investors
-
Passively managed funds with a low expense ratio
-
ETFs can invest in particular indices, sectors and commodities
-
International ETFs are also available that invest in international markets
What are the different types of Exchange Traded Funds?
Equity-oriented ETFs
They invest in equity-oriented indices.
Sectoral or thematic ETFs
They invest in indices of a particular sector.
Commodity ETFs
They invest in different types of commodities like gold, silver. etc.
International ETFs
They invest in international indices.
Inverse ETFs
ETFs which aim to deliver the opposite return of the underlying index.
Leveraged ETFs
They invest in debt and debt-oriented derivatives.
Debt ETFs
They invest primarily in debt instruments and indices.
Who should invest in Exchange Traded Funds?
-
New investors who want to invest in a particular index or commodity.
-
Investors looking to invest in low-cost schemes.
-
Investors who want portfolio diversification .
-
Investors looking for tradeable investments which can be easily liquidated.
What is the tax implication of index funds?
Equity-oriented funds
• Returns up to Rs.1 lakh are tax-free
• Returns exceeding Rs.1 lakh are taxed at 10%
Debt-oriented funds
• Returns earned are taxed at income tax slab rates
Dividend income is taxed at your income tax slab rates
What are some of the things to consider when investing in Exchange Traded Funds?
-
Check the past performance and choose a fund which has offered consistent returns.
-
Know the trading volume of the ETF to assess its demand.
-
Though it is low, check the expense ratio of the fund.
-
There will be a tracking error and the returns might not be equal to those of the underlying index or commodity.
Guaranteed returns, liquid trading
-
Diverse bond types -
Stable portfolio returns
Secure retirement with Life Insurance
-
Secure regular pensions
-
Save on taxes
FAQs On Debt Funds
Exchange Traded Funds (ETFs) are essentially mutual fund schemes or index funds that are listed and traded on an exchange, akin to stocks. ETFs can be purchased and sold throughout the trading day, offering investors the opportunity to capitalize on intraday price movements. An additional advantage of ETFs is the ability to buy even a single unit, allowing exposure to the entire index at minimal amounts.
To invest in ETF one need to have a Trading and Demat account as ETFs are exchange traded. Once one have opened the trading and demat account, he/ she can select the ETF he wants to invest and place the order through trading account. ETF orders can be placed during market hours.
ETFs provide numerous benefits to investors:
Convenient Buying/Selling: Easily tradeable like any other stock on the exchange through trading account.
Real-Time Prices: Buy or sell at current market prices in real-time.
Limit Orders: Ability to place limit orders for added control over transactions.
Seamless Process: No need for separate form filling; units are delivered directly to your demat account.
Minimal Investment: Minimum investment is just one unit, offering flexibility.
Lower Expense Ratio: ETFs typically have a lower expense ratio compared to index funds.
No STT on Purchase: There is no Securities Transaction Tax (STT) on the purchase of GOLD ETFs, LIQUID and Gilt ETFs, and some international ETFs.
STT is applicable on other type of ETF as below
- 0.001% on the sell side for delivery and BTST trades.
- 0.025% on the sell side for intraday trades.
Although the Expense Ratio of ETFs is typically low, there are specific costs unique to ETFs. As ETFs are acquired as shares through a broker, investors may incur brokerage charges with each purchase. Additionally, investors may face customary trading costs, including variations in the ask-bid spread, etc. It's worth noting that traditional Mutual Fund investors also indirectly bear similar trading costs, as the Fund covers these costs through expense ratio.
Index ETFs: These funds are crafted to replicate a specific index like Nifty50 or Sensex.
Fixed Income ETFs: Designed to offer exposure to a wide range of available bonds.
Sector ETFs: Tailored to provide exposure to specific industries, like oil, pharmaceuticals, or high technology.
Commodity ETFs: Crafted to track the price movements of specific commodities such as gold, oil, or corn.
Leveraged ETFs: Geared towards using financial leverage to enhance returns.
Actively Managed ETFs: In contrast to those tracking an index, actively managed ETFs aim to outperform it.
ETNs (Exchange-Traded Notes): These are debt securities secured by the issuing bank's creditworthiness, facilitating access to illiquid markets while offering the advantage of generating minimal short-term capital gains taxes.
Alternative Investment ETFs: Examples include funds allowing investors to trade volatility or gain exposure to specific investment strategies like currency carry or covered call writing.
Style ETFs: These funds are designed to mirror a particular investment style or market size focus, such as large-cap value or small-cap growth.
International ETFs: Tailored to monitor non-Indian markets, examples include those linked to Japan's Nikkei Index or Hong Kong's Hang Seng Index.
Inverse ETFs: Crafted to profit from a decline in the underlying market or index.
Other asset class funds
Debt Funds
Invest in debt securities for low risks and stable returns.
Fund of Funds
Mutual funds that invest in other mutual funds both in India and globally
Know More
Hybrid Funds
Get a mix of equity, debt and other asset classes for a diversified portfolio
Know More
Index Fund
Passively-managed mutual funds tracking a particular index
Know More