InvestmentFinancial Glossary
ETF (Exchange Traded Fund)
Definition
A mutual fund that trades on stock exchanges like a regular share. ETFs typically track an index (Nifty 50, Sensex, Gold) and can be bought and sold throughout the trading day at market prices. Unlike regular mutual funds that are priced once daily at NAV, ETFs have real-time pricing.
Why It Matters
ETFs offer the lowest expense ratios in the mutual fund universe (0.03-0.15%), making them ideal for passive investors. However, ETFs require a demat account and may have liquidity issues (wide bid-ask spreads) in less popular variants. For most retail investors, index mutual funds are more convenient than ETFs.