Long term investment - ETF or MF?

Personal finance
1

Hello all,

For horizon of next 30 years, which vehicle is better for niftybees and n100, ETF or mutual funds? For ETF, one has to place manual order which can get automated through MF SIP.

However MFs have exit load. But I think that exit load comes equivalent to STT/taxes that one has to pay at the time of selling ETF. Can anyone give suggestions with pros and cons? I found lot many funds having niftybees base, which one is better, how to make a selection? Need help

2

this is upto ones personal choice really… there isn’t really much difference between etf and index fund… only real pros and cons are while there is automatic sip possible with mutual fund, same is not case with etf, other than this there isn’t really much difference…

also maybe another thing will be liquidity, other than nippon india, ETF’s offered by other amc’s aren’t that liquid and also tend to have high tracking error.

2 Likes
3

Am I correct saying that mutual fund houses can increase/add expense ratio and exit loads in future? So buying via exchanges could be a better option?

4

@ankur0101 The same could be possible with ETFs also, as even they might increase in future. Generalizing this between Mutual Funds and ETFs may not be advisable. A lot might differ based on the choice of your invest (Index ETF/Fund, Gold ETF/Fund).

We mush first research the expense ratios on both ETF and Mutual Funds for your chosen investment vehicle.

Although, my personal advice will be to stick to Mutual Funds unless there is a considerable difference in the expense ratio. For a passive long term investment, you need discipline, which is indirectly brought to you through Mutual Funds.

However, if you are very active with your investments, there is still a way to invest recurringly via Zerodha. You may want to go through their article on how to set up SIP on stocks here.

It is also advisable to check the marginal changes in the expense ratio of your funds, maybe annually, to ensure the dynamics still stay the same between your chosen MF and ETF.

5

As per Zerodha team - Stock/ETF SIP feature is coming soon. For details -

6

Zerodha’s SIP in stocks is a model of less greediness in falls and higher costs in Bullish move. Absolutely useless.

Thanks @ipotantra and @sachinsp15