Indexing or Exchange Traded Funds(ETFs) have gained popularity in global markets. With a large number of institutional investors in the market, it has become impossible for any active investor to consistently beat the market, hence the best way to participate in the market is through index funds. ETFs are the most efficient route to take exposure to an Index and when compared to any other open ended index funds ETFs are transparent, low cost, traded on the Exchange just like any other stock and offers solution across asset classes.
How one can you use ETFs?
You can diversify your core equity holding with a single ETF unit
Use it to build a long term core holding of equity by systematically investing in various index funds like Nifty ETF, Nifty Junior ETFs, If bullish on market, just buy a Index ETF and no need to do individual stock picking
If you have some stock in your portfolio, just do a switch trade by selling the stocks in your portfolio and buying an Index ETF of your choice.
Taxation is like shares(long term Capital Gain is zero and Short Term is 15%)
However before investing it is very much necessary that you invest in the’right’ etfs. Gold BeES is the largest in terms of volumes and also the most sought after etf in India followed closely by Nifty BeES