What is the difference between Nifty ETFs and Nifty index funds? — Rakesh Kaushik
Nifty ETFs and Nifty index funds have the same constituents. But an ETF is able to track the index more efficiently. You buy an ETF the way you buy a stock, you need to have a demat account and you need to place an order with your broker. The ETF may not necessarily trade on NAV; it can often trade at a discount or premium to its NAV. On the other hand, an index fund is an open-end scheme that is bought like a regular mutual fund. However, in India, index funds have a high tracking error as they're unable to replicate the index with perfection.
This article was originally published on January 14, 2013.
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