Exchange Traded Funds i.e. ETFs are becoming increasingly popular for investment. There are mainly three types of ETFs – Equity ETFs, Fixed Income ETFs and Commodity ETFs. Equity ETFs are funds that track the index or sector of stocks. Such as benchmark indices like Nifty50 Index, BSE S&P 500 Index or sectors like Nifty IT, Nifty FMCG. Also try to replicate the performance of the index.
The return of ETF depends on the tracking error. Tracking error is the difference between the return of an ETF and the return of the index that the ETF tracks. The lower the tracking error, the closer the return of the ETF will be to the benchmark. Fixed income ETFs invest in fixed income securities like debt, bonds. Fixed income ETFs can be useful for investors who do not want to take much risk on their investments. Commodity ETFs invest in different commodities like gold, agri commodities etc.
(Disclaimer: This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO and Mutual Funds.) Most people think that ETFs only invest in equity shares. But that’s not the case. How many types of Exchange Traded Funds are there? How much does Tracking Error affect ETF Return? Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
