What all you need to know about ETFs (Exchange Traded Funds)

As you might have heard a lot about ETFs as Exchange-traded funds (ETFs) have become increasingly popular in recent years as investors seek to diversify their portfolios and gain exposure to a wide range of asset classes. In this article, we'll explore what ETFs are, how they work, and some of the top ETFs of US and India based on performance and popularity.

What are ETFs?

An ETF is a type of investment fund that is traded on an exchange like a stock. ETFs hold a basket of underlying assets, which could be stocks, bonds, commodities, or other types of securities. When you invest in an ETF, you're essentially buying a piece of that basket of assets, giving you exposure to a diversified range of investments in a single trade.

One of the key benefits of ETFs is their low fees. Because ETFs are passively managed, meaning they simply track an underlying index or basket of securities, their expenses are generally lower than actively managed mutual funds. This can result in higher returns for investors over the long term.

How do ETFs work?

ETFs are created and managed by financial institutions known as ETF providers. These providers purchase the underlying assets that make up the ETF's basket and issue shares of the ETF to investors. The price of each share is determined by the net asset value (NAV) of the underlying assets.

ETFs can be traded throughout the trading day on an exchange, which means that investors can buy and sell shares at any time during market hours. This makes ETFs more liquid than many other types of investments, which can only be traded at certain times or under certain conditions.

Top ETFs of United States

There are thousands of ETFs available on the market today, covering a wide range of asset classes and investment strategies. Here are some of the top ETFs to consider:

1. SPDR S&P 500 ETF Trust (SPY) - This ETF tracks the performance of the S&P 500 index, which is made up of 500 large-cap U.S. stocks. It is one of the most widely traded and popular ETFs on the market.


2. Vanguard Total Stock Market ETF (VTI) - This ETF tracks the performance of the entire U.S. equity market, including large-cap, mid-cap, and small-cap stocks.


3. iShares Core U.S. Aggregate Bond ETF (AGG) - This ETF tracks the performance of the U.S. investment-grade bond market, including government and corporate bonds.


4. Invesco QQQ Trust (QQQ) - This ETF tracks the performance of the Nasdaq 100 index, which is made up of 100 of the largest non-financial companies listed on the Nasdaq stock exchange.


5. Vanguard FTSE Developed Markets ETF (VEA) - This ETF tracks the performance of developed market stocks outside the U.S., including Europe, Japan, and Australia.

Top ETFs of India

Here are some of the top ETFs (Exchange Traded Funds) in India, based on their performance and popularity:

1. Nifty 50 ETF - This ETF tracks the Nifty 50 Index, which represents the top 50 companies listed on the National Stock Exchange (NSE) of India.


2. BSE Sensex ETF - This ETF tracks the BSE Sensex Index, which represents the top 30 companies listed on the Bombay Stock Exchange (BSE) of India.


3. Nippon India ETF Gold BeES - This ETF invests in physical gold and tracks the price of gold in the Indian market.


4. SBI ETF Nifty Next 50 - This ETF tracks the Nifty Next 50 Index, which represents the top 50 companies listed on the NSE after the Nifty 50 companies.


5. ICICI Prudential Nifty Low Volatility ETF - This ETF invests in stocks from the Nifty 50 Index that have low volatility and aims to provide stable returns with lower risk.


6. Kotak Nifty Bank ETF - This ETF tracks the Nifty Bank Index, which represents the top banking and financial services companies listed on the NSE.


7. UTI Nifty Index Fund - This ETF tracks the Nifty 50 Index and aims to provide long-term capital appreciation to investors.

Conclusion

ETFs can be a great way to diversify your portfolio and gain exposure to a wide range of assets at a low cost. By understanding how ETFs work and researching the top ETFs available on the market, you can make informed investment decisions that align with your long-term financial goals.

Also it's very important to note that investing in ETFs carries risks and investors should conduct their own research and seek professional advice before making any investment decisions.