Tips for Investment in ETF (Exchange Traded Fund) in 2011

Here are some tips to invest in ETF along with its definition, benefits and limitations.

Listed investment funds in share market is called ETF (Exchange Traded Fund).There is a group of shares is ETF which can be bought or sold in the market. Meanwhile, the trading of mutual funds is not done.

The price of ETF is calculated by Net Asset Value (NAV). NAV is calculated by market value of bonds or shares of ETF. Cash and unpaid dividend are also included in it. But there can be a difference in NAV and price of ETF due to arbitrage and other reasons. The price of ETF keeps on fluctuating with change in demand. Also, NAV is not correct due to tracking error.

Benefits of investment in ETF

• Prices can be monitored from the sale purchase of ETF as similar in shares.
• ETF provides knowledge of investment each day, which makes investment more transparent.
• ETF can be sold easily.
• Investment in various sectors can be done by investing in ETF.
• Income tax is not levied on dividend received from ETF.
• There are fund managers for each ETF due to which investors need not to involve insurance ale purchase of shares.

Limitations of ETF

• Shares of only 1 country are included in ETF.
• More tracking errors puts effect on profits/ losses of investor.

To read more about ETF, please visit the web page at What is ETF?

Article by Nidhi
Nidhi is a freelance content writer with 7+ years experience. She has great passion to write on valuable topics so as to provide accurate information to her readers. She is also keen to provide employment to all Indians and so posts various job openings too in this website.

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Author: parikshit21 Mar 2017 Member Level: Bronze   Points : 0

Hello Nidhi, I like your all articles. I want to suggest you to please write an article about buying and selling rare coins. I have some rare coins and am trying to sell them on ebay, olx and quicker but am not getting any response.

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