What is an ETF (Exchange-Traded Fund)?
An ETF is a basket of stocks (like an index fund) that trades on the exchange like a single stock — buy and sell it live during market hours.
An exchange-traded fund (ETF) is a basket of securities — often tracking an index like the Nifty 50, a sector, or gold — that you can buy and sell on the stock exchange just like a single share, at live prices through the trading day.
ETFs combine the best of two worlds: the instant diversification of a mutual fund with the flexibility and low cost of a stock. Most ETFs are passive (they track an index), so their fees are usually very low, and you only need a demat account to hold them.
The main differences from a regular index mutual fund: an ETF’s price moves continuously (a fund is priced once a day), and you buy it via a broker at the market price, which can sit slightly above or below the fund’s true value. For long-term SIP-style investing, an index mutual fund is often simpler; for live trading and low cost, an ETF shines.
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Common questions
What is the difference between an ETF and a mutual fund?
An ETF trades live on the exchange like a stock and needs a demat account; a mutual fund is bought/sold once a day at its NAV. ETFs are usually cheaper and passive.
Are gold ETFs a good way to buy gold?
Gold ETFs let you own gold in electronic form without storage or purity worries, tracking the gold price closely. They are a convenient alternative to physical gold for investment.