How many types of ETFs are available on NSE?
ETF - Exchange traded fund. They are traded like an stock and it does not have a NAV like mutual funds. Usually ETF tracks an index/commodity/basket of assets.
ETF is a product build around an asset. The price of the ETF is supposed to mimic the price of the asset. For example, Nifty Bees is an ETF, the price of which mimics the asset - which is Nifty Spot. Goldbees is an ETF which mimics the price of Gold in spot. So an so forth.
One of the advantage of an ETF is that it can be bought in a single unit…for example you can have 1 Nifty Bees, which is as good as saying you hold 1 unit of the Nifty Index. Its convenient and hassle free.
It is the responsibility if the company running the ETF ( Goldman Sachs runs most of the ETF’s in India) to ensure that the price of the ETF exactly replicates the underlying asset. There is a metric called “Tracking Error” which helps us identify the well managed ETF from the bad ones.
So when you buy your ETF, ensure the tracking error is low!
How safe is it to invest in ETF. What if Goldman Sachs goes Bankrupt like Lehman Brothers. Does Goldman Sachs keep any deposits with NSE to ensure safety of Investors. Or is it like a stock & if the company goes Bankrupt it does not have any or last responsibility towards an investor.
ETFs are mutual fund sachems which are traded on the NSE and BSE.
You may refer to http://passivefunds.in/index-funds-etfs/ to know more about ETFs in India.
Karthik, if I am a MF distributor/agent, can I sell ETFs to my clients or its meant only for personal investing? Also, ETFs need to be bought through a broker or through the company offering ETF(like Goldman Sachs as mentioned by you in the answer)? thanks
You can buy an ETF via your regular stock broker. Not sure if you can sell ETF’s to clients…request you to get in touch with the AMC for exact details.
Karthik, you have written this in your answer - “Nifty Bees is an ETF, the price of which mimics the asset - which is Nifty Spot. Goldbees is an ETF which mimics the price of Gold in spot. So an so forth.” Can I know the ticker symbol for “Gold in spot” pls?
You need not to worry about benkrucacy of Goldman or for that matter any AMC in India. These are the SEBI regulated entities. You are investing in AMC’s scheme & not in AMC as an enitity.
Can I trade in NiftyBees like I buy and sell after an hour? And what are the charges? Are they same as stocks?