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Thursday, February 19, 2015

Investing in Exchange traded Funds (ETF's)

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(20/2/2015 StockInvestingTips ETF investing series) - Exchange Traded Fund's or ETF's are investing tools which are professionally managed by Mutual funds companies in India, I have already posted about Exchange Traded funds in my previous article titled
"Investing in ETF's and calculation of NAV". In this article I would give details about type of Exchange traded funds available in India and how they function. What are different companies which provide fund management for ETF's in India. Exchange traded funds can be traded through trading terminals present across the country. ETF's are closer to Mutual funds trading ie you have to know Net Asset values of ETF's as in case of Mutual Funds investing. You can invest small amount of money per month in Exchange traded funds

Broadly there are 3 types of Exchange traded Funds:
1)Gold ETF
2)Liquid ETF
3)Equity ETF

Gold Exchange Traded Funds(GETF): Many exchange traded funds invest there money in gold markets/indices. These funds track the price of gold and companies which specialize in gold offer gold Exchange traded funds. Generally returns of investment from Gold ETF's can be tracked by the rise in gold prices in bullion market.

There are various Gold ETF's which are listed on National Stock Exchange and Bombay Stock Exchange. Some of the Gold ETF's which are traded on NSE and BSE are as follows:(If any one wants to start investing in gold ETF then he can track any of following fund and measure NAV value for each of the fund)

Sr No.Gold ETF nameIndex SymbolParent Fund
1Reliance Gold ETFRELGOLDReliance Mutual Fund
3Birla Sun life Gold ETFBSLGOLDETFBirla Sun Life Mutual Fund
4Axis Gold ETFAXISGOLDAxis Mutual Fund
7Kotak Gold ETFKOTAKGOLDKotak Mutual Fund
8Religare Gold ETFRELGOLDReligare Mutual Fund
9ICICI Prudential Gold ETFIPGETFICICI Prudential Mutual Fund
10Goldman Sachs Gold ETFGOLDBEESGoldMan Sachs Mutual Fund

Equity Exchange Traded Funds (EETF): Equity Exchange traded funds are closed funds which specialize investing money in particular index of a stock market like BSE SENSEX, Midcap ETF, Smallcap ETF etc. Return of investment in Equity ETF's can be tracked by movement of the particulat index over time. Some of the Equity Exchange Traded Funds often make investments in Index on basis of weightage of a particular component. These funds can be purchased or sold in real time. There are numerous EETF's which are traded on both NSE and BSE daily.
Some of the major EETF trading on indian stock markets are as follows:

Sr No.Equity ETF nameIndex SymbolParent Fund
1ICICI Prudential CNX 100 ETFICCNX100ICICI Prudential Mutual Fund
2Birla Sunlife NIFTY ETFBSLNIFTYBirla Sun Life Mutual Fund
3Kotak PSU bank ETFKOTAKPSUBKKotak Mahindra Mutual Fund
4Goldman Scahs Infrastructure ETFINFRABEESGoldman Sachs Mutual Fund
5MoSt Shares M50M50Motilal oswal Mutual Fund
6Kotak SENSEX-Kotak Mahindra Mutual fund
7GoldMan Sachs Nifty junior fundJUNIORBEESGoldman Sachs Mutual fund
8Goldman Sachs NIFTY shariah index ETFSHARIAHBEESGoldman Sachs Mutual Fund
9R Shares CNX 100 FundRELCNX100Reliance Mutual Fund

Liquid ETF: liquid Exchange traded funds are money market exchange traded funds. there are very few companies which have theri Liquid ETF's in market. One of the Liquid ETF available is LIQUIDBEES from Goldman Sachs Mutual fund. Companies which manage these liquid ETF's invest the money in call money, short-term government securities and money market instruments of short and medium maturities.

All of the ETF's come with the market fluctuation risks, They are similar to Mutual funds with minor differences as NAV for ETF are not calculated on daily basis. investors can invest in ETF's on similar lines as they do in SIP.

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