Exchange Traded Fund (ETF) are funds that track indices such as Sensex, Nifty, etc. When you buy units of an ETF, you actually buy units of a portfolio that tracks the performance of the index. ETFs just reflect the performance of the index they track.
Unlike regular mutual funds, ETFs trade like a common stock on the stock exchange and the price of an ETF changes as per the trading in the market takes place. The trading value of an ETF depends on the net asset value of the underlying assets that it represents. ETFs, generally, have higher daily liquidity and lower fees than mutual fund schemes
Lower expense ratio compared to mutual funds.
Easy buying and selling on the exchange like stocks, providing flexibility and liquidity.
Well-diversified with a mix of different assets, reducing risk.
The exchange-traded funds (ETFs) cannot be bought or sold in fractions unlike mutual fund units. Additionally, there are additional costs to consider, such as brokerage fees charged by stockbrokers when buying or selling ETFs, and demat charges, if applicable.