Exchange Traded Funds (ETFs)
Passively managed funds are best represented through ETFs. These funds invest into an underlying asset or portfolio of assets and trade over stock exchanges. The underlying portfolio may represent an index, securities or commodities. ETFs can be easily bought / sold anytime during market hours like any other stock on the exchange. The trading price is usually close to the fundâ€™s actual net asset value (NAV). Investments in ETFs, however, require investors to hold share trading and demat accounts.
Investing in ETFs
ETFs can be bought or sold in two ways. But before you begin to invest in ETFs, it is important that you take into account the following points:
1. You need to open a trading account with a broker/ sub-broker.
2. You should also have a demat account for holding the ETF units.