Exchange Traded Funds

Exchange Traded Funds (ETFs) were first launched in India in December 2001 by Benchmark AMC. Now, a total of five ETFs are available to investors. ETFs are fundamentally different from normal funds and have thus developed something of a reputation for complexity. While some of the details of how AMCs run ETFs are genuinely more complex, that has nothing to do with investors. For the investors, ETFs are a straightforward instrument that offers some interesting features. Let's see what makes ETFs different. ETF are index funds. An index fund is an equity fund, which tracks a particular market index like the BSE Sensex or the Nifty. The index fund holds the same stocks as the underlying index and in the same proportion as the index. From an investment point

This article was originally published on December 11, 2003.