ETF explained

[anuragmukherjee28]

ETFs, or exchange-traded funds, are baskets of securities that trade on an exchange like a stock. They can track a variety of indexes, such as the S&P 500 or the Nasdaq 100, or a specific sector or industry, such as technology or healthcare. it is a union of stock market and mutual funds ( refer to the attached diagram)

ETFs offer a number of advantages over other types of investments, including:

• Diversification: ETFs provide investors with a diversified way to invest in a particular market or sector.
• Low cost: ETFs typically have low expense ratios, meaning that investors keep more of their returns.
• Transparency: ETFs are transparent investments, meaning that investors can easily see what holdings are in the fund.
• Liquidity: ETFs are liquid investments, meaning that they can be bought and sold easily.

ETFs can be a good investment for a variety of investors, including:

• New investors: ETFs are a good way for new investors to get started in the market because they are easy to understand and invest in.
• Experienced investors: ETFs can also be a good investment for experienced investors who want to diversify their portfolios or gain exposure to a particular market or sector.
• Retirement investors: ETFs can be a good investment for retirement investors because they are low-cost and offer diversification.

 

[ShavirB]

ETFs, or exchange-traded funds, are baskets of securities that trade on an exchange like a stock. They can track a variety of indexes, such as the S&P 500 or the Nasdaq 100, or a specific sector or industry, such as technology or healthcare. it is a union of stock market and mutual funds ( refer to the attached diagram)View attachment 74

ETFs offer a number of advantages over other types of investments, including:

• Diversification: ETFs provide investors with a diversified way to invest in a particular market or sector.
• Low cost: ETFs typically have low expense ratios, meaning that investors keep more of their returns.
• Transparency: ETFs are transparent investments, meaning that investors can easily see what holdings are in the fund.
• Liquidity: ETFs are liquid investments, meaning that they can be bought and sold easily.

ETFs can be a good investment for a variety of investors, including:

• New investors: ETFs are a good way for new investors to get started in the market because they are easy to understand and invest in.
• Experienced investors: ETFs can also be a good investment for experienced investors who want to diversify their portfolios or gain exposure to a particular market or sector.
• Retirement investors: ETFs can be a good investment for retirement investors because they are low-cost and offer diversification.

Just to add to this, ETFs usually have very low costs (expense ratio). In most of the cases they have lower costs than even Index Funds of the same category.

And before investing in ETF, you should check the AUM. If the fund has slightly low AUM ( <100 crores), there could be some challenges in buying and selling of your units on exchange

 

[ag3nt47]

Hi can you please tell what ETFs do with the dividends??

is it re invested or they pay out??
and if there are both type of ETFs
how to know which ETF I'm looking at in Groww App

 

[anuragmukherjee28]

Hi can you please tell what ETFs do with the dividends??

is it re invested or they pay out??
and if there are both type of ETFs
how to know which ETF I'm looking at in Groww App

You're right, there are two main ways ETFs handle dividends:

1. Reinvesting dividends: This is where the ETF automatically uses the dividends it receives from the underlying stocks to buy more shares of the ETF itself.
2. Paying out dividends: In this case, the ETF distributes the dividends it receives to its shareholders in cash.



Unfortunately, the Groww app doesn't explicitly state whether an ETF reinvests or pays out dividends.

 

[ag3nt47]

Can you name apps where we can see and invest in dividend reinvestment ETFs

As I want to go for long so It is an important factor for me