Which are the Best Performing ETFs in India
Diversification of portfolio is an important part of investing. It helps in reducing the risk, because the market can be volatile and unpredictable. Diversified investment won’t move in the same direction at the same time. For instance, some of them will be up, while some of them will be down. If an investor keeps a high percentage of their portfolio in a single asset class, then the risk of losing it is quite high.
We invest across different asset classes such as stocks, bonds, gold and real estate to get diversification. One such key investment vehicle is ETF’s. Exchange Traded Fund are a good way to diversify your portfolio. An Exchange Traded Fund (ETF) is basically a basket of securities you buy or sell through a brokerage firm on a stock exchange. It is basically a passive managed fund i.e. Once it is floating on an exchange, the fund automatically performs depends on its underlying index’s performance. In India, it mainly reflects the composition of an Index, like Nifty or BSE Sensex. The value of them is based upon the net asset value of the underlying stocks that it represents. One can consider it as a Mutual Fund, which you can buy and sell in real time at a price that change throughout the day. It’s a simple way to diversify the portfolio by allowing investors to participate in the whole sector and avoid single stock risk. There are several reasons that make them an ideal investment vehicle for every investor:
Variety of ETFs:
The rise of Exchange Traded Funds appears to be the unfolding big investment story. The first Indian ETF, Nifty BeES were introduced in January 2002. Since then it has grown rapidly. Globally, there are more than 5,000 ETFs that trade globally. But in India, there are more than 60 plus ETF in India. While the growth in the last three years is heartening, this segment in India lags far behind its developed market peers.
They are market securities, which are traded on respective stock exchanges. It can be bought and sold any time in the day during the trading hours. It is highly liquid compared to other investment product such as PPF or Index mutual fund.
They follow an index, so it is quite easy to know which stock it will hold on what proportion. For example, A Nifty 50 index tracks the fifty largest market capitalization company listed on the National Stock Exchange. An ETF tracking the Nifty 50 will hold the companies in the same amount.
The ETFs in India can track various diverse products such as Nifty, Gold, Nifty Next 50 and several others. There is hardly any mutual fund tracking these funds.
Low Expense Ratio:
One of the advantages of investing in them is cost efficiency. The expense ratio of these funds is usually less than 0.5% compared to 2- 2.5% in actively managed funds. In the long term, it creates a lot of value to your investment.
7 Best Performing ETFs in India
As per Gulaq methodology, here:
|SBI-ETF Nifty 50|
|HDFC Nifty 50 ETF|
|ICICI Pru Nifty ETF|
|Edelweiss ETF – Nifty 50|
|Reliance ETF Nifty BeES|
|Aditya Birla SL Nifty ETF|
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*Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.