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You must know people who enjoy haggling with street vendors and rickshaw drivers, seeking the best deal, only to splurge on impulsive shopping sprees. This tendency of being penny-wise and pound-foolish can also manifest in the realm of investing, especially if you happen to be an ETF (exchange-traded fund) investor. ETFs have earned immense popularity among passive investors in the last few years, primarily because of their low-cost advantage. The median expense ratio of the top five Nifty-50 ETFs is 0.07 per cent, as against 0.18 per cent charged by index funds. But does the low expense ratio of an ETF actually give it a distinct edge over its rival, index funds? Let's find out. ETF vs index fund: A head-to-head fight To make a fair comparison, we analysed the top-three Nifty-50 ETFs and index funds offered by the same AMC over the last five years. In the case of ETFs, we took the average of a day's high and low price as a proxy of an investor's transaction price. The returns based on this proxy price were compared with index funds, and this is what we foun
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